Why Globalisation Works, by Martin Wolf

"We are globalisers now," says Buddhadeb Bhattacharjee, the Marxist chief minister of West Bengal. "We have been to Shanghai and seen that it works." Calcutta may have a way to go before it rivals the prosperity of Shanghai. Still, the quotation captures the way the world's two most populous nations have embraced globalisation.

The current burst of growth of China and India is testimony to the power of an idea that has swept the world. To embrace the global market economy is now recognised by both as the only path by which developing countries can become richer, and give a better life to their people.

But it is fashionable, at least in the rich developed world, to attack globalisation. Some attacks are physical. It is impossible to hold a meeting of the G8, or of bodies such as the World Bank or WTO, without the threat of disruption by rioters. Other attacks are intellectual. Many charities campaign against globalisation or its agents, the multinational companies and international banks.

Martin Wolf, now chief economic commentator for the Financial Times but earlier a World Bank economist, seeks to demolish the ideas of these critics. His argument is that the world needs more globalisation, not less. The attacks, he points out, come from two main groups. The first are those whose economic interests are damaged by greater freedom of trade and investment: trade unions, concerned by competition from lower-waged workers, farming lobbies and other producer organisations. The second group are non-governmental organisations, often with idealistic goals and drawing on wide popular support.

Their criticisms range from general concerns, such as the unaccountability of the financial markets, to more specific ones, such as the lack of fair trade in commodities. Wolf notes that while much of the attack is based on emotion, there are serious critics in finance, including George Soros and the former World Bank economist, Joseph Stiglitz.

Some challenges can be dismissed as economically illiterate: he demonstrates that the belief that extreme poverty is rising is wrong. But others do carry a measure of truth. It is very hard to defend the European Union's agricultural protection. Wolf acknowledges that IMF policies in the 1990s were too subservient to the US. The liberal global market economy is not perfect and its institutions are not perfect. Sensible defenders acknowledge room for improvement.

Like many who note the rising barrage of opposition to the liberal market economy, Wolf is troubled that the progress of the past half-century could be reversed - just as the great expansion of the 19th century was reversed in the catastrophe of 1914. He concludes that there are good reasons to be hopeful that the benefits of globalisation will continue to spread. Wolf will probably not convince the anti-capitalist campaigners but, if he gives useful intellectual support to market reformers in China and India, that is a bigger prize - and a bigger market.