High Noon for Globalisation

Griffith University - 9 July 2001

Extraordinary advances in technology have ushered in a new phase of globalisation. It is irrelevant whether globalisation began with the steam engine, the scramble for Africa, the boom in international trade at the beginning of the 20th century, or deregulation and free trade in the 1980s. The fact is that mechanisms that have enabled rapid growth in international interaction today have shrunk the world in a manner previously unimaginable.

The term globalisation is often used in ways that leave it ill-defined. For some it is a universal good, for others a considerable evil. Definition is important. And so I have taken globalisation to represent the interaction, integration and interface between national economic, environmental and social systems.

For many, globalisation seems to be led and dominated by large, globalised corporations. But it is also a political phenomenon which in many ways has limited the power of government. It has also given rise to concern about its environmental and cultural impacts. In many instances it is the lag between the economic forces behind globalisation and its corresponding political legitimacy, which have been the cause of conflict. There has been far too little objective debate about globalisation and its various guises. This has led to confusion and misunderstanding.

Today, I am going to explore two key aspects of globalisation: global economics, and global politics. There is obviously a close inter-relation between the two.

Within the economic sphere itself, there are two separate but related discussions. One relates to trade, the other concerns the financial markets. Globalisation has caused great economic wealth but inequities are emerging that require attention and action in order to ensure that the future holds continued economic stability and growth, and that all people and nations have the opportunity to share in the benefits of globalisation.

In addition, the impact of globalisation on culture and the environment is a key part of the total equation.

The 19th century and indeed the first three quarters of the 20th century were in many ways spent in humanising capitalism. From a system in which the strong profited greatly and the weak suffered, capitalism was developed, up to the present time at least, into the best system for the advancement of people as a whole.

The impact of globalisation in the last twenty years has so reduced the responsibility of national governments that international answers must be sought to replace formerly effective and acceptable national solutions in the search to humanise capitalism. Unfortunately the reach of globalisation has lessened the impact of earlier changes and has made a new search for international solutions imperative to make it possible for more people and more countries to share in the wealth and benefits.

Let me pursue the economic aspects.

The prerequisite of any advancement in economic and political terms is the necessity for good governance, a well run economy, transparency and accountability. These are all vitally important ingredients if any country is to maximise the possibilities of globalisation. Any discussion on the successes and failures of globalisation must be held within this context.

The proponents of globalisation argue that financial deregulation and free trade have been the engines of world growth over the last 50 years. Many would argue that such growth is of long term benefit to everyone. What is the reality?

World trade has seen rapid expansion over the past 25 years, although as a proportion of world GDP it is not as great as that in the period between 1870 and 1914. While it took Great Britain 100 years to double its wealth in its steam driven revolution of the 19th century, Asian countries have done the same in a couple of decades or less – it took South Korea 11 years and China just 10. (Patten, The Robert Menzies Lecture Trust, 2000)

Globalisation has thrived in a competitive market place, under deregulation and the increasing demands for free trade. The collapse of the Soviet Union, and the failure of old style socialist economies will ensure that the competitive market place will dominate the future.

At the same time governments have chosen to be less interventionist in the economy. Across the political spectrum liberal, conservative and formerly socialist parties have all accepted the downsizing of government, the privatisation of many activities and the reduction of government debt. Private enterprise, capitalism labelled 'the market', is predominant.

We have had global corporations for decades but the rules have changed. Where the products or services may be the same, the structure is different. Instead of operating through separate national units there is one selling unit - the world. Some aspects of corporate activity will be local, but only where it strengthens their global competitiveness.

It has long been recognised that a fair and competitive market place is a rare thing - an equal number of suppliers, an equal number of buyers, all of the same financial strength. Such situations do not exist. That is why anti-trust legislation was born. It is why fair trading practices were put in place. With the internationalisation of trade and commerce, with the globalisation of corporations, purely national rules to preserve fair-trading are no longer fully effective.

In today's world, governments must fashion their policies to meet the wishes of the international market place. Governments are in competition to make their countries more attractive for investment and for trade. That in itself has significant implications for social policy. Where the World Trade Organisation has been established to advance free trade and prevent protection it does not really promote competition in a global sense. There are some who allege that its rules have been devised to suit the strong and wealthy economies to the detriment of poorer ones.

It is in the high technology and manufacturing sectors where free trade has advanced most. These are areas where advanced economies excel. In other areas free trade has not been so successful. The US and Europe, great proponents of free trade, spend $300 billion a year in subsidising agriculture. They undermine the spirit of free trade by income support for farmers in place of the direct subsidisation of agricultural produce. However, its effects are the same. Leaving aside an advanced country like Australia such outcomes have serious consequences for the developing world and for an equitable trading structure.

Many third world countries have had their development hindered by lack of access for their agricultural products to wealthy markets. Truly open trade would have better and more positive results than all the development assistance offered today. To deny the third world access to affluent markets in agriculture is to make a substantive decision against the interests of those countries. Can we ever look forward to a world in which there will really be free trade in agriculture? For developing countries it would be a major and substantive advance.

Yet if we look at the past, what chance is there for any American government to stop subsidizing American agriculture, or for the French to make decisions that would devastate the countryside and their way of life? Is free trade only to be advanced in areas where the decision makers will do well? Are subsidies going to continue where those decision makers cannot realistically compete?

In this sense, international trade is neither free nor fair.

Governments have been accused of losing power to globalised corporations but it would be more accurate to say that they have forfeited power to the market place.

In a sense we have gone full circle. Internationally we have created the kind of power structure that would have existed within a nation in the early part of the 19th century. Without international rules, which can only come from much greater international cooperation, it is impossible to expect an equal playing field to emerge in the market place where rich and poor alike can benefit from the advances globalisation has brought.

Let me turn to the operations of the financial markets.

Information technology operates incomparably faster and with more devastating effect than the old cable system of the last hundred years. This has led to an explosive growth in financial markets.

The volume of money traded each day is huge. It dwarfs the funds needed to finance trade and normal commerce between nations. It is far more important in determining the value of a currency than is the impact of finance for trade or for investments. In one day trade in financial instruments of one kind or another can be sufficient to finance world trade and investment for an entire year. Through modern communications, this finance has great mobility. And as Peter Drucker put it in an article in Foreign Affairs: 'It serves no economic function and finances nothing. This money also does not follow economic logic or rationality. It is volatile and easily panicked by rumour or unexpected events'.

We have been warned about unfettered markets by a significant authority. George Sorros wrote 'Although I have made a fortune in the financial markets, I now fear that untrammelled intensification of laissez-faire capitalism and the spread of market values to all areas of life is endangering our open and democratic society. The main enemy of the open society, I believe, is no longer the Communist but the Capitalist threat… Too much competition and too little co-operation can cause intolerable inequities and instability…The doctrine of laissez faire capitalism holds that the common good is best served by the uninhibited pursuit of self-interest. Unless it is tempered by a recognition of a common interest that ought to take precedence over particular interest, our present system...is liable to break down'. (Sorros, 1997)

If Greenspan had not bailed out Long Term Capital Management no one could have predicted where the fall out would end. The recent HIH collapse here, shows that lessons are still not learnt - even in advanced countries. Why did our regulatory system fail? What role did the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission play in monitoring HIH?

The Australian Prudential Regulation Authority was established by the Government in July 1998 following the Asian meltdown. Its purpose was to improve regulation and supervision and maintain the health of financial markets. Instead of being merely restricted to the operations of the banks, its role was expanded to include insurance companies, superannuation funds, credit unions and building and friendly societies. Its failure in relation to HIH raises significant questions about the incisiveness and robustness of the way in which it was carrying out its responsibilities. Similarly the Australian Securities and Investments Commission is a corporate watchdog. It too failed to spot the failing HIH. This 'system' failure is a much more important question with respect to economic confidence and the future stability of the economy than the nature of the management of HIH.

At present there is no international regulatory regime in the financial markets. The International Monetary Fund's role seems to have been restricted to helping countries pick up the pieces after a major collapse. It has not devoted its energies to seeing that such collapses do not occur. It has also had a one-track solution for such countries but, as a result of the problems in Asia in 1997, both Malaysia and China have demonstrated that there is more than one way to avoid difficulty or to emerge from it. For a while after 1997, it appeared as though the financial architecture may be restructured and made much more effective but, as time has passed, people and institutions have relaxed and far too little has been done.

There is an urgent necessity for greater transparency in financial transactions, for improved and strengthened prudential supervision, indeed for an in international regulatory regime which can be effective. Transparency, accountability and good corporate governance, are essential ingredients for stability.

These matters cannot be left to national governments alone. Movements of capital are so large that the efforts of any one government will, by definition, be inadequate. The system remains vulnerable.

Despite the enormous growth in wealth that has been experienced in many instances because of the opportunities presented by globalisation in both trade and the financial markets, there have also been many who have missed out on these opportunities, and whom the new wealth has not touched.

While many third world countries have benefited from the global economy, the divide between North and South is continuing to expand. Over 100 of the largest economies in the world are corporations. The sales of Ford and General Motors combined are greater than the combined GDP of sub-Saharan Africa while those of the six largest Japanese companies are almost as big as all the nations of Latin America combined.

This reflects a tension between globalisation's economic predominance, and a corresponding political or social legitimacy. Globalisation's economic success carries parallel social failures. I will turn now to some social, environmental and cultural aspects of globalisation.

By the late 1990s the fifth of the world's people living in the highest income countries had

• 86% of world GDP, the bottom fifth just 1%
• 82% of world export markets – the bottom fifth just 1%
• 68% of foreign direct investment – the bottom fifth just 1%
• and 74% of the world's telephone lines – the bottom fifth just 1.5%
• the gap income between 20% of the richest and the poorest has grown from 30:1 in 1960 to 82:1 in 1995

Tokyo alone has more telephone lines than the whole African continent – in many ways the most fundamental requirement for growth and development in the communication age.

Many see globalisation as a partnership between business and business and that, in large part, government and civil society has been by-passed.

Those who argue that a strong, growing economy will spread wealth throughout the entire community need to explain the increasing discrepancy between rich and poor both in our own country and between the wealthy and poorer countries of the world. Yet to say that globalisation is the sole cause of poverty is also a gross overstatement. Many developing countries have been winners on the system.

Ultimately there are many who feel they are being left behind by globalisation, in third and first worlds alike, and their concerns should be analysed and addressed.

A reflection of this sentiment can be found in the violent demonstrations, which, in large part began in Seattle, and have taken place where multi-national corporations and international economic institutions have met since then. These so-called 'dotcom revolutionaries' are angry that these unrepresentative non-State actors appear to be making decisions which are affecting their every day lives, and those of the working person in Australia, Europe or the United States. There is a feeling of powerlessness which has significant implications for today's democracies.

Among the raging and furious demonstrators in Seattle was a curious banner, which read 'The Worldwide Movement against Globalisation'. Recent flows of information, research, ideas, and experiences have made the world a much smaller place. Even those against globalisation use its tools for their demonstration and cannot resist spreading their movement throughout the world.

Who are the so-called 'losers' of globalisation? Manufacturing workers feel disempowered as they see their factories moving off shore to cheaper labour, and less stringent industry standards in developing countries. Australian farmers and people living in rural, regional and remote areas feel they are being left behind and are unable to truly participate in the new global economies because of the lack of infrastructure for an effective communications network. The ill-educated and computer illiterate probably feel they are losers in the system, as well as left-wing revolutionaries who perceive the total victory for the capitalist system represented by globalisation.

In developing countries the losers are those who are not sharing in the burgeoning wealth. Countries which are unable to attract foreign investment, or whose workers are too ill educated and little skilled to attract industry. Those countries who depend on an agricultural economy and are unable to access wealthy markets, and countries who are racked by insecurity and civil war.

There are two vital questions with regards to the level of participation in globalisation in the third world. The first is governance, and the second, poverty. There are some countries of extraordinary natural wealth that have been badly governed and are subsequently being left behind – Zaire is a good example. On the other hand Tanzania, which has been well governed has few resources and is terribly poor. It too, is in large measure being left behind.

Part of the question for us today, is how do we address the concerns of the disenfranchised, disempowered, and disenchanted? How do we ensure that programmes are put in place to enable them to participate in the process that has so much benefit to bring to bear?

In many ways one of the most important aspects of participation in the new global economy is communication infrastructure. If a village woman in Africa has access to information she will be far less vulnerable to exploitation and have much greater opportunity for participation. The information age has brought with it a demand for transparency and accountability. If communication infrastructure can bring with it information, which results in greater transparency we may see greater results than ever before in the development of nations. An international programme to bring adequate communication technology throughout the world over the next 5 years could be achieved.

In addition to the communications network, there is a need to retrain those who have been displaced by globalisation, wherever that may occur. Future labour forces in developed and developing countries need to be adaptive and flexible. It is essential to have the relevant skills in order to participate fully and to be able to embrace the many opportunities that globalisation presents.

These are challenges that should be met but most likely won't be. They are challenges that would have been willingly accepted in the 1950s but today's world is sadly different.

If we look at the environmental implications of globalisation we see that the environmental lobby has been particularly strong, and has the advantage of specific scientific research and evidence that demonstrates that environmental degradation anywhere affects us all. We are all totally and irreversibly linked by the environment we share and we all have a vested interest in its protection.

The multi-national corporations have often argued that globalisation and economic expansion has nothing to do with environmental degradation. That the cause of environmental damage is market failure, which occurs when those consuming goods and services do not bear the full costs of their actions, such as pollution. But this is only part of the story.

In developing countries the need for foreign currency earnings have been critical and in many cases subsistence farming has been replaced by cash crops for export. Occupational health and safety standards are often lower, and trade practises regimes less stringent enabling big business to establish manufacturing plants at a much lower cost than in their industrialised neighbours.

This transfer of jobs from industrial nations, while bringing employment and investment to developing countries, has incurred significant costs in some cases. The environmental disaster at Ok Tedi, would be impossible in countries with stronger, and more stringently enforced environmental laws. Papua New Guinea was keen to have Ok Tedi developed and yet if they had imposed all the environmental costs of that development on BHP, then BHP may never have taken on the task of the development of the mine. Perhaps today they wish they had not.

In a famous memo a former chief economist at the World Bank, Lawrence Summers, argued the case for locating 'dirty' industries in less developed countries because, among other reasons, the loss of earnings caused by higher death and injury rates would be much lower in poor countries than in rich ones.

In many instances developing countries have had to tolerate the conditions investors have imposed upon them and they remain without a significant voice in the international arena. Developing countries have often advanced their own case ineffectively, especially in relation to access to markets. Additionally, they did not participate in the Kyoto Protocol, wanting instead to exploit their natural resources, however, while this is understandable, one consequence is to provide loopholes for global corporations to shift 'dirty' industries there.

In addition, the World Trade Organisation rules forbid any discrimination against a company that has a poor environmental record. This lack of support for the environment movement, along with the vulnerability of developing countries, provide even more leeway for the large global corporations to act with limited liability, transparency and accountability. In some instances, environmental regulations in some countries have been interpreted as illegitimate protection against free trade and have been criticised by the WTO.

National culture is becoming an increasingly important issue in a globalised world. Many of those concerned with the progress of globalisation are concerned by a perceived loss of cultural identity. They see globalisation as 'westernisation' or even worse, 'Americanisation'.

Some governments have made decisions in an effort to protect their national identity. In Canada, the government determined that a certain level of content on Canadian television should be Canadian programming. However, to make a good, Canadian half hour of television costs $1 million, to buy half an hour from Hollywood costs US$25,000. The Americans have used the NAFTA to attack Canada on the basis that their cultural protection legislation was against NAFTA principles of Free Trade. The NAFTA found for the United States .

The preservation of national culture is of vital importance to the health and stability of States. The use of NAFTA to oppose 'cultural protection' by the United States does give Canada considerable concern.

Some commentators argue that we will see the demise of the modern nation-state, as we know it. That globalisation will result in an all encompassing, borderless, nationless world. That culture will cease to be as important and we will become 'citizens of the world' loyal to our global community and humankind.

The idea that we will see the demise of the State is, in my view, totally unfounded. Can anyone really imagine the French and Germans as one people? The British and Europe, Japan and Asia , Serbs and Albanians, China and the United States? More and more communities are attempting to re-establish local identities weakened by globalisation. While globalisation has progressed, we have seen an increase in ethnic loyalties and civil conflicts as people struggle to find representation through some form of self-determination. Within the United Kingdom, Wales and Scotland have recently achieved their own parliaments.

Despite the increase in number and influence of non-state actors, globalisation has no real sense of global village. The World is smaller and we recognise a common humanity and a need to work together for a sustainable future. Yet when it comes to the crunch we are mainly concerned with these issues in so far as they affect us. The job of governments is to look after the national interest. This has been seen most specifically in two recent examples. The first was Peter Costello's decision regarding the North West Shelf and the sale of Woodside, and the second was President Bush's withdrawal from the Kyoto Protocol.

In times past foreign investments were welcomed where they were bringing new technologies and new businesses to the economy. But more and more foreign investment does not bring anything new to the economy but a change in ownership from Australian to foreign hands. It is right for the Government to ask itself whether all Australia's assets and economic advantages should be sold offshore. It is also right that as long as a Government in protection of its core interests lays down clear rules, the market will wear such interference.

Shell's bid for Woodside Petroleum meant that the control of the marketing and operation of the North West Shelf would move into foreign ownership. The Treasurer's concerns were that Shell had no real interest to market Australian gas before the gas from any of its other fields. The decision reflected the desire to ensure that such marketing powers remained in Australian hands with Australian interests a first priority. It was a difficult but good decision.

President Bush pulled out of the Kyoto Protocol because he views Kyoto as bad for American industry. Does this mean that he would not embark on any decision that will add costs to American industry even if those costs are necessary to protect the environment. Industrial nations must set an example to the third world who are already well aware that our wealth has been built on the back of our natural resources. If we are still unprepared to meet the cost of protecting the environment, how can we expect poorer nations to do the same?

So where are we? We have a trading system that is biased towards advanced nations. We have fragile financial markets with quite inadequate prudential supervisions and regulation. Social, cultural and environmental concerns are not adequately addressed. The problems of those who have lost out in the process of globalisation, whether in rich or poor countries, are not addressed. Within these deficiencies, there are important problems that transcend national borders and which must be given attention.

In the absence of official actions, global corporations are beginning to be held accountable by a demanding public, consumer, and shareholder. During the 80s and early 90s profit ruled corporate behaviour, but we are now seeing a fundamental shift in thinking and corporate governance. Interest groups are constantly reminding consumers and shareholders how our favourite consumer brands exploit cheap and child labour in developing countries in order to maximise profit. If manufacturers don't listen they pay the ultimate price as consumers walk with their wallets to their green, or socially just competitors.

Sustainability is an important concept in corporate governance today. Coupled with social responsibility programmes and the need to be seen as a good corporate citizen, there is increasing pressure on business to report on all aspects of their operations.

The 'triple-bottom line' demands that the economic profit is weighed against the social and environmental costs of operating. Gross exploitation is no longer acceptable and key stakeholders are holding business accountable in a manner impossible before the communication age. More and more investors choosing to put their money into ethical investment funds. Shareholders are saying 'no' to unsound business practices.

Business is recognising the need for a compact between themselves and the community in which they operate. While many of the mining companies have recognised this for some time and have recorded their relationships as important in order to have 'licence to operate' other sectors are only just recognising the need for a similar relationship. This should be welcomed. Businesses do not work in an isolated economy. They are but one part of a healthy, robust, civil society.

Governments, through their aid programmes, have been trying to address some of the real concerns around good governance and democratisation in the developing world. If they can encourage transparency and accountabilities through strengthening the democratic process and its corresponding freedoms, then many countries may be more able to participate in globalisation than is currently possible.

Globalisation has also brought with it a new complexity of non-state actors playing a vibrant and increasingly important role in the decision-making processes that exist within the international arena. Some of these transcend national borders – international institutions such as the World Trade Organisation, big multi-national corporations (like CNN), or development agencies such as CARE International. Others may represent smaller and specific interest groups.

These small steps, however, are hardly enough to address the considerable concerns of the critics of globalisation.

In real terms, globalisation has meant that the state system is being challenged more fundamentally than at any time since the emergence of the Westphalian system of government. There are now major interlocking economic, political, cultural and environmental matters that must be addressed by governments acting in concert or by international agreement. This independence is reflected in major problems that transcend state boundaries.

How do we move forward? Global corporations are trying to make positive changes through their corporate social responsibility programmes. Governments try to promote democracy and good governance, but this is far short of an adequate answer.

Attempts to improve financial co-ordination and co-operation internationally are, so far, inadequate. Movements for free trade have not created a level playing field. New problems are emerging in the preservation of national culture and of the environment.

There are some who would want to see a new world system based on an augmented capacity for central guidance and an increased role for non-territorial actors. Such outcomes are unlikely in the short or medium term. What kind of organisation could manage and guide these global issues, where international rules are clearly needed. Where does that leave liberal democracy, based on state borders?

The United Nations - as presently organised - could not take on this role. Its establishment was not for global governance but to protect and uphold international peace and security. Where its Charter claims to represent 'We the Peoples of the United Nations' at its beginning, in no other aspect does the Charter reflect or claim to represent individuals.

An international body to 'rule over us' is bound to fail given the ultimate self-interest of the nation-state. Yet some mechanism is needed to guide or to regulate matters which can now only be resolved in the international arena. So far, the record of governments acting in concert is not particularly good. The record in establishing an international body to manage certain functions is not much better. Until now there has been a failure to fashion new juridical formulations responsive to political realities of the new world system.

Indeed there is little agreement as to what these realities are, and what type of juridical system could be put in place. Even movement for an International Criminal Court with the jurisdiction to hunt down and prosecute those indicted for war crimes or crimes against humanity is meeting strident objections around the world. States are loath to give up 'sovereignty' over their own citizens and believe ratification of the International Criminal Court may do so despite the enormity of the crimes over which the ICC would have legal compete

It is clear there is no returning to the older world. We cannot take a Hansonite view and batten down the hatches. Protection and isolation are not viable options for any country in today's world. We are left with the problems which we still have not been able to resolve.

I hope we can agree that we cannot totally abrogate responsibility to the marketplace – there are too many circumstances where the market lacks stability. It can shy at unseen dangers. It can itself make most irresponsible decisions. An effective global economy requires sound judgment and management.

Our democratic representation is through National Governments. But national governments, acting individually are unlikely to provide adequate and effective management and guidance. Their record of acting in concert is not greatly better. With the exception of the United States, no one national government is large enough or powerful enough to influence events.

There may be room for a compulsory Trade Practices Court. Such a Court may be able to pursue global corporations who are trading outside certain rules laid down to establish fair, ethical trade, with proper attention given to the cultural integrity of states and to the world environment. But no such rules exist and who, in today's world, would try and establish such agreement? Where international agreements are made, it is generally because major states drive the issue. Will they not as in the past, drive the issue in their own interests, rather than in the interests of all nations? What can be done to see that poor and under-represented nations have an adequate voice? If such rules could be agreed, would they have to be ratified by national governments? Would the United States Congress participate? If they did not, would the arrangement fall to the ground?

If international rules and authority were ever established, to whom would it be accountable? Could it be accountable to a regular meeting of governments? Would all governments be involved or would some argue for representation to be based on global economic share instead of upon the universality of membership?

The demonstrations that are taking place before global economic forums are underlining the lack of thought, the lack of examination, the lack of understanding where globalisation, in all its aspects, is headed. These are obviously complex issues. One of the significant problems facing us is that international law is, by its nature and respect for national sovereignty, a voluntary competence.

Even the International Court of Justice can only hear cases between consenting nations, how then would a Trade Practices Court gain its competence? How, then, can we devise a new system that would combine the delicate sensibilities of the sovereign nation state, with new requirements for the compulsory competence of some form of international regulatory authority, or Court.

Can we find a way of overcoming the problem caused by one international player being much larger than any other and sometimes larger than all others combined? The management of any institution with such a disparate balance of power is enormously difficult. We need international cooperation rather than unilateral decision making of the United States, and without it we are at risk of continuing to see an increasing number of 'losers', which could serve to be destabilising in both an economic and political sense. Many of these questions have no answer today. What is clear is that governments need to devise a system of transparency, prudential regulation, accountability and an international system of trade practises which is fair and just for all players in the international arena, and to those who aspire to play.

The current economic reality is one of an inextricably linked global system of trade and financial markets. Technology has developed at an extraordinary pace facilitating this economic expansion, but with it has come a demand for greater transparency and accountability. Multi-national corporations can no longer act with impunity - environmental disasters caused by mining companies are no more acceptable than child labour employed by clothing manufacturers. The triple bottom line is an increasingly common requirement as companies report to better-informed shareholders and customers.

While civil society is trying to keep business accountable the reality is that the vast economic expansion of the last 30 years has come at a cost. Social, environmental and cultural risks are being taken, often with devastating results.

Governments must find a balance between allowing market forces to determine their own direction, and ensuring that the national interest is preserved. Some involvement in market regulation is essential both at a national and international level, if we are to maximise the benefit of globalisation for the most people. A Trade Practices Court may have some merit, however there are critical hurdles to be overcome in its formation and I fear some of them may bring the idea crashing down.

It is essential to develop programmes both nationally and internationally to encourage those who tend to be left behind. That may be retraining for ones own people; it might be communications technology for least developed countries; it may be technical help with the requirements of sophisticated financial management. Without such programmes and others like them, despite the many benefits of globalisation, it is likely to attract more and more demonstration and disruption.

We must be aware that globalisation has the possibility to bring extraordinary well being to an enormous proportion of the world's population. The challenge is not to turn the clock back, but to ensure that the benefits of globalisation are felt by all. We must be sure that those who have the most to gain do not do so to the detriment of those who have the least to lose.

Managing the future is an enormous challenge. Over the last quarter century, political leaders and countries have been reactive to the imperatives of globalisation, especially to the imperatives of open communication with its implications for financial markets and for trade. The world has moved, driven by technology. There is now an urgent need to take time out to think about where technology is leading. The changes and the advances cannot be stopped but we need to have a better idea than we do today about the implications for an open society, for a liberal democracy for the freedom of people.

Today our generation is without a political philosophy relevant to our time and circumstances. We have a theory of globalisation but, baldly stated, it is cold and technical, it is not yet adequately related to human needs. Perhaps we need a new generation of philosophers, a new John Locke, a new Rousseau. If we remain merely reactive to inevitable change as it takes place, concern and discontent will grow. We need an idea of how our society will develop and how, in a more global society, peoples will relate to each other. We need a philosophical framework.

In the 1800s, industrialisation was accompanied by growing democracy. In the earlier part of the last century the idea of a liberal democracy started to be given effect.

My concern for the future is that liberal democracy as we know and understand it, will not be able to cope with the challenges that emerge as globalisation and technology advance and take us to a different world. Already the change is substantial; already the murmurings of discontent are growing; already political leaders worldwide are demonstrating that they do not have answers to the problems stirring in the hearts of men and women. This will be the great challenge for this century: how we as peoples respond to it, will determine the shape of our societies.