Whither Globalisation?

By—Girish Mishra

Prime Minister Manmohan Singh, on the morrow of Independence Day, was interviewed by Rajat Gupta of The McKinsey Quarterly. Towards the end of the interview what Manmohan Singh, in response to the question: “What message would you like to give global managers as they think about India?” stated was quite revealing and throws ample light on his beliefs and commitments. To quote his own words: “If I have any message, it is that it is our ambition to integrate our country into the evolving global economy. We accept the logic of globalization. We recognize that globalization offers us enormous opportunities in the race to leapfrog in development processes. It also obliges us to set in motion processes which would minimize its risks.” He went on to add: “The economic reforms that our salvation lies in—operating an open society, political system, an open economy, economic system—this has widespread support. Fifteen years ago, a Congress government launched this economic-liberalization program, integrating India into the world economy. Since then, three governments have come and gone, but the direction of economic policy has been, year after year, toward more liberalization. The pace may be slow, may not be as quick as some people would want, but the direction is unmistakable. India’s future lies in being an open society, an open polity, a functioning democracy respecting all fundamental human freedoms, accepting the rule of law and, at the same time, to emerge as a successful, internationally competitive economy.”

From the above it is crystal clear that, so far as the direction and the goal of the Indian economy are concerned, there has been no difference among the governments since 1991. It can also be inferred that the differentia specifica between the BJP and the Congress is communalism. In other words, BJP-communalism + secularism = Congress. One does not know whether the Indian National Congress and its supreme leadership accept this formulation.

Prime Minister’s assertions seem surprising when serious doubts have arisen as to the efficacy and survival of the Washington consensus-based globalisation. After the devastating attacks by the Nobel laureate Joseph Stiglitz, a leading Canadian scholar John Ralston Saul has come out with his book The Collapse of Globalism, which asserts that the Washington consensus-based globalisation has been fast petering out. Before we proceed to look into his contentions, let us say a few words about Saul. He is a past president and now an honorary patron of the Canadian PEN. In 2004, he received the Pablo Neruda International Presidential Medal. His publications include Voltaire’s Bastards: The Dictatorship of Reason in the West, Unconscious Civilisation, and The Six Qualities of the New Humanism. His wife Adrienne Clarkson is Canada’s Governor-General.

Prof. Martin Jacques has termed Saul’s The Collapse of Globalism as “an eminently readable book. The brunt of his argument is surely right and … after years of being forced to read text after text, speech after speech, article after article from the neo-liberal globalisation hymn sheet, it is breath of fresh air to read the unauthorized version.” (The Guardian, July 23, 2005)

Saul dates the ongoing globalisation to the 1970s and contends that from 1995 it has been on the decline. According to him, its basic tenet is that “civilization should be seen through economics and economics alone.”

The prophets of globalisation have been asserting that it is inevitable, in fact, decreed by God almighty Himself and no earthly power can check its onward march and wisdom demands that one should fall in line and join its bandwagon. In an article, Saul writes: “We have scarcely noticed this collapse … because Globalisation has been asserted by its believers to be inevitable—an all-powerful god; a holy trinity of burgeoning markets, unsleeping technology and borderless managers. Opposition or criticism has been treated as little more than romantic paganism. It was powerless before this surprisingly angry god, who would simply strike down with thunderbolts those who faltered and reward his heroes and champions with golden wreaths. If Globalisation has seemed so seductive to societies built upon Greek and Judeo-Christian mythologies, perhaps the reason is this bizarre confusing of salvation, fatalism and punishment. Transferred to economics, in however jumbled a manner, these belief systems are almost irresistible to us.”

Saul claims that no grand economic theories have lasted for more than a few decades. “The wild open-market theory” ended in 1929 just over three decades. Keynesianism that came in the wake of the Great Depression withered away in mid-1970s when stagflation came to dominate. Saul goes on to add: “Our own Globalisation, with its technocratic and technological determinism and market idolatry, had 30 years. And now it, too, is dead.” The signs of the collapse have been multiplying since mid-1990s. Only the vested interests refuse to see them and have been trying hard to prevent others from seeing them. “The British and French empires had vaunted and defended their power in similar ways from the late 19^th century on; that is, just as they began to collapse.”

The proponents of globalisation had claimed that nation-states were sure to go out of existence and give way to global markets. In future economics, not politics, would determine the course of events. Market, not the government, would be the driving force in all spheres of life. The New Economy based on information and communication technologies would banish business cycles for all times to come. Markets freed from government and social control would establish and maintain all desired balances. Besides, the economies would grow unimpeded and international trade would expand by leaps and bounds after the removal of all regulations and barriers. The tide generated by them would lift all ships whether of the Western poor or of the developing world. Globalisation would prompt countries hitherto under dictatorships to go in for democracy. Internationally integrated economies would banish wars and civil strife. Did not Thomas Friedman pontificate that no countries eating McDonald burger would go to war! Rabid nationalism, racism and separatism of all kinds would get weakened. Transnational corporations would provide international leadership untouched by local political and social prejudices. There would be stability in the world and lasting peace would prevail. And history would come to an end, a la Fukuyama.

The leadership of global marketplace pushing out the considerations and constraints of national politics would lead to balanced budgets and economic stability. To quote Saul, “In summary, global economic forces, if left unfettered by willful man, would protect us against the errors of local self-pride, while allowing individual self-interest to lead each individual to a better life. Together these forces and self-interest would produce prosperity and general happiness.”         

Globalisation emerged after the death of Keynesianism and growing fissures in the socialist world and certain changes in the West. While Western political leaders got confused, representatives of TNCs at Davos sermonized that the concern with public good should give way to the primacy of trade, competition and self-interest.

The ideas that came up in the wake of the economic crisis of the 1970s were formulated and integrated into the ideology of Globalisation based on Washington consensus at the behest of the USA and international financial institutions inspired by it. The disintegration of the Soviet Union and a right about turn by China and the collapse of NAM created an illusion that there was no alternative to accepting the US hegemony and its ideology of globalisation. Tonnes of papers were used for tomes to propagate it, sometimes in pseudo-scientific garb by so-called theoreticians of international repute besides journalists.

Developing countries became so terrified that they accepted the prescription of the Washington consensus-based globalisation and began shrinking the size of civil services, deregulating economies, bringing down tax rates, privatizing public undertakings, bringing hitherto public goods like sanitation, health, education, water, public security, postal services and so on within the purview of market, budgets came to be balanced and most, if not all, measures of social welfare were shelved. In the words of Saul, “Government after government, as if in a fit of moralism, legislated away its right to take on debt or collect new taxes, even though both of these were fundamental government powers, central to the construction and maintenance of democracies. In fact, debt and taxes had played the same fundamental role in the pre-democratic period. At the same time, the private sector invented myriad new debts and privatized taxes for itself. Everything from junk bonds to credit cards was treated as an unregulated privatized currency. And corporations used the old default mechanism more than ever to clear their own decks whenever it was handy to do so.

“The sin of public debt was then broadened by attributing it to public utilities. Running well or not, they had to be privatized and deregulated into a global marketplace to cleanse them of public sector inefficiencies. This led in turn to the large utility-style private businesses, such as airlines, being freed of regulatory restraints to satisfy a moral version of individualism that promised, for example, the right to travel, cheaper fares, greater choice, more destinations.”( www.afr.com/articles/2004/02/19/1077072774981.html)

The turn of events since the1990s has destroyed a number of props of globalisation. To begin with, there is no sign of weakening of nationalism and nation states Recall what has happened in former Yugoslavia, Rwanda, Congo and elsewhere. Civil strife, too, is unabated. In our own country, the massacre in Gujarat illustrates this. Gujarat and Gujarati businessmen have been more pro-globalisation as compared to other regions. Both India and Pakistan fought the Kargil war refuting the Friedman thesis. Second, more and more countries are going out of the purview of globalisation. Brazil, Argentina, Bolivia, Venezuela, Peru, etc. have followed the path of Malaysia, which refused to kowtow the IMF dictate during the financial crisis of the 1990s. Saul is not wrong when he asserts: “Latin America no longer believes in Globalisation. Neither does Africa. Nor does a good part of Asia. Globalisation is no longer global.”

With the failure of talks earlier on Multilateral Agreement on Investment (MAI), and now on WTO’s next round facing great obstacles, it is obvious that globalisation is in retreat. To quote Prof. Martin Jacques, “It is worth reminding ourselves what was at issue with the MAI. The key paragraph guaranteed that foreign investors would receive “treatment no less favorable than the treatment [a country] accords its own investors and their investments with respect to the establishment, acquisition, use, enjoyment and sale or other disposition of investments.” This was globalisation with a swagger, an extraordinary example of neo-colonialism (as it-correctly-used to be called) in action: it also proved to be a case of hubristic imperial overreach. The developing world successfully resisted the proposal and it died a death.

“Since then, the WTO process has been paralysed, the developing world has found new voice and confidence, personified by the ad hoc alliance between China, India, Brazil and South Africa. Meanwhile the conflict between Brazil and South Africa and the Western drug companies – with their absurdly high prices and their insistence on intellectual property rights…has brought what were previously seen as rather esoteric issues to the attention of an increasingly outraged global public.”  

The fate of the ongoing globalisation hinges on the USA, which has till now found it useful for serving its own interests. Once it finds that it is no longer useful to it, it may discard it. It happened not long ago when it unilaterally decided to forsake the parity between dollar and gold fixed when the Bretton Woods institutions came into being. As is known to all that the USA never ratified the GATT. Whenever it has found the UN not subservient to its interests, it has ignored it altogether. More recently it happened when the UN did not agree to its plan of invasion of Iraq. The question of reorganizing the Security Council has been hanging fire because America does not want the entry of more permanent members with veto power. In view of what history tells, it is too much to claim that the ongoing globalisation is irreversible and the wise thing for India is to jump on to its bandwagon as early as possible.

There are any number of reports from UN, ILO, Asian Development Bank and other international organization showing that ever since globalisation has become dominant, inequalities have increased not only in developing countries but in America and other developed countries too.  The Washington Post (June 14) reports: “The income gap between the rich and the rest of the US population has become so wide, and is growing so fast, that it might eventually threaten the stability of democratic capitalism itself.” Two and a half months later The New York Times (August 31) has this to say: “Even as the economy grew, incomes stagnated last year and the poverty rate rose, the Census Bureau reported.” Earlier the same newspaper (June 5) had revealed: “The people at the top of America’s money pyramid have so prospered in recent years that they have pulled far ahead of the rest of the population, an analysis of tax records and other government data by The New York Times shows. They have even left behind people making hundreds of thousands of dollars a year.” Obviously, these statements nail the lie that the tide of globalisation raises all ships, i.e., it benefits all whether the rich or the poor.

It is high time that the United Progressive Alliance led by Sonia Gandhi and its Left supporters take note of what Saul says and not be misled by the propagandists for ongoing globalisation and the courtiers of the USA masquerading as NGOs.

Girish Mishra,

                                                                                     E-mail: gmishra@girishmishra.com