Real Face Of Globalisation

M K Pandhe

“THE current path of globalisation must change. Too few share in its benefits. Too many have no voice in its design and no influence on its course.

“There are deep-seated and persistent imbalances in the current workings of the global economy, which are ethically unacceptable and politically unsustainable.”

These are not statements made in the May Day rally by the trade union leaders or people who stoutly oppose globalisation. These are observations of World Commission on the Social Dimension of Globalisation, established by ILO. The 21-member commission of prominent experts from all over the world constituted the commission, which was co-chaired by Ms Tarja Halonen, President of Republic of Finland and Mr Benjamin William Mkapa, President of the United Republic of Tanzania. The report of the Commission has just  been published which highlights the devastating world scenario created by the  advent of globalisation since 1991. The worldwide struggle of the trade unions and other social organizations have brought into sharp focus the ill-effects of globalisation. However, the World Bank and IMF were trying to rebuff these arguments and a section of the trade union leadership of advanced capitalist countries were singing in praise of globalisation. Several economists in India who were aspiring to get a covetous job in the World Bank or IMF for 5 years which would ensure them a pension of $2000 per month for life, were also becoming salesmen of the globalisation package. The Congress and BJP welcomed the globalisation package which was characterised as “irreversible”. The following findings of the World Commission is an eye-opener for the pontiffs of globalisation and they  should  do some introspection about their own understanding:

SUBVERTING SOCIAL JUSTICE

The report clearly observes that the imbalances between the economy and society is subverting social justice (emphasis added).

1. There is a growing divide between formal global economy and the expansion  of informal local economy in most societies. The majority of the world’s people, who live and work in the informal economy, continue to be excluded from directly participating in markets and globalisation on a fair and equal basis. They enjoy  none of the property and other rights, nor the  capabilities and assets they need to enter into productive economic transactions.

2. The benefits of globalisation have been unequally distributed both within and between countries. There is growing polarisation between winners and losers. The gap between rich and poor countries has widened. In Sub-Saharan Africa and Latin America, more people lived in poverty in the end of 1990s than at the beginning of that decade.”

3. There is imbalance in the global rules. Economic rules and institutions prevail over social rules and social institutions, while the effectiveness of existing rules and institutions themselves are being tested by current global realities. Trade in manufactures is liberalized, while agriculture remains protected. Goods and capitals move much more freely across borders than people do. In times of crisis, developed countries have wider options for micro-economic policy, while developing countries are constrained by demands for adjustment. International policies are too often implemented without regard for national specificities. Unbalanced global rules can reinforce initial inequalities. The rules of the world trade today often favour the rich and powerful, and can work against the poor and weak, whether these are countries, companies or communities.”

4. “Structural change, without adequate social and economic provision for adjustment has brought about uncertainty and insecurity to workers and business everywhere, both in the North and South, women, indigenous people and working poor without skills and assets, are among the most vulnerable. Unemployment and underemployment remain stubborn realities for the majority of the world’s population.”

 These observation rebuffs the arguments of those who speak about the advantages of globalisation. Particularly in India it shows the World Bank lobby was conveying misinformation to the people of India to hoodwink them.

The above observation speaks about agriculture being protected. It  mainly refers to the governments in advanced capitalist countries  who give record subsidy to agriculture to sell the products in developing countries at a cheaper price and destroy the agriculture of the third world counties. In USA, alone the agriculture subsidy is estimated at $360 billion. However, these countries are pressing the developing countries to withdraw their subsidies to agriculture so that the products of developing countries remain costlier. This is being opposed by the developing countries who feel the real nature of the subsidies of the advanced capitalist countries.

GROWING GLOBAL INEQUALITY

The World Commission collected data to find out how globalisation has contributed to the growing inequality in the world. It was seen that between 1960-62 the per capita GDP of 20 poorest countries in the world was $212 which increased by $55 only between the years 2000-02 making it $267 per capita GDP. However, in case of 20 richest capitalist countries per capita GDP which stood at $11,417 during 1960-62 went up to $32,339 during 2000-02, i.e. a rise of $20,922. In other words, per capita national income of 20 richest capitalist countries was 54 times per capita income of 20 poorest countries in the world during the year 1960-62. This inequality became more severe during the last 40 years and during 2000-02 the per capita income of the 20 richest capitalist countries went up to 121 times the per capita income of the 20 poorest countries. This harsh reality alone proves to the hilt that process of globalisation has only favoured richest capitalist countries while the poorer countries have been the victims of globalisation. The MNCs are not yet happy about the rising inequality in the world. They want to increase their wealth faster at the cost of poorer countries and all new proposals advanced by them only express the desire of MNCs to increase further the global inequality!

The process of globalisation has increased inequality within the richer capitalist countries while the working class and poorer sections of the society has suffered in this period. For example in USA top one per cent of the population in 1975 was having gross income of 8 per cent of the total population’s gross income. In 1999 it increased to 17 per cent of the gross income of the total population in USA! In case of Canada  the same proportion increased from 8.5 per cent to 13.5 per cent during 1999. Thus the benefits of globalisation were mainly appropriated by the big capitalists in the rich countries while working class and poorer in the society  continued to suffer in the process!

Based on the data compiled by the World Bank, the World Commission noted, “Here it is striking that since 1990 global GDP growth has been slower than in previous decades, the period in which globalisation has  been most pronounced. At the very least this outcome is at variance  with the most optimistic predictions on the growth-enhancing impact of globalisation.” All the pro-globalisation Indian economists should take note of this hard reality noted by the World Commission. All the claims of our learned economists have been belied. However, it is difficult to make sense in the mind of these economists since during the entire decade of globalisation they refuse to see the reality.

DECLINE IN GROWTH RATE

The World Bank data shows that per capita GDP growth in the world was 3.5 per cent during 1961-70, which came down to 2.5 per cent during 1971-1980. The trend of decline in growth of per capita GDP continued during eighties of the last century, which was only 1.5 per cent.  However, during nineties the rate further declined to 1.2 per cent of per capita GDP growth all over the world. Since the world entered new millennium the rate of per capita GDP growth in the world further declined to one per cent only!

The World Commission further noted the uneven distribution of the growth rate of per capita GDP in the world during 1985-2001. According to its report, “Growth has also been unevenly distributed across countries, among both industrialised and developing countries. In terms of per capita income growth only 16 developing countries grew at more than 3 per cent per annum between 1985 and 2000. In contrast 55 developing countries grew at less than 2 per cent per annum, and of these 23 suffered negative growth.” The rapid growth of Chinese economy is giving some what distorted picture of growth of the world economy. The picture of the world would look more dismal if the remarkable growth shown in China is taken out separately!

The Human Development Report prepared by UNDP has pointed out the jobless growth of the economy, which ultimately becomes futureless growth. With closure of large number of units and all-round downsizing of manpower the unemployment has increased to higher proportions. The World Commission  has not collected data regarding total unemployment  in the world. However, it has studied “open unemployment” which has increased to 18 crores. In reality the figures of unemployment will be much higher. The ILO observes that the serious situation of unemployment is likely to stay for quite some time in the  near future. According to ILO the percentage of the unemployment in different regions is as follows:

Unemployment (in percentage):

Latin America & Caribbean  - 9.9%

East Asia                                    -   4%

SE Asia                                       - 6.5%

South Asia                                 - 3.4%

European Union                      - 7.6%

USA                                           - 5.6%

Japan                                          - 5.8%

Sub-Saharan Africa                 - 14.4%

Middle East  & North Africa - 18%

Growing unemployment is also responsible for increasing pauperisation and destitution of the masses. Criminalisation of society has also become a problem due to growing unemployment as a result of globalisation.

The so-called self-employment of non-agricultural  jobs  have increased phenomenally due to globalisation. Due to non-availability of jobs  several people are forced to do some jobs on their own to earn a very low earning living. According to ILO all over the world 32 per cent of the non-agricultural employment is of such “self-employed persons.” This has reduced the quality of job that is available in the society. The break up of such-self-employed non-agricultural workers in different continents is as follows:

Developed countries     -  12%

Africa                                -  48%,

Latin America                 -  44%

Asia                                  -  32%.

Thus, the degradation of human  labour has become  a serious problem all over the world as a result of globalisation.

GROWING ABSOLUTE POVERTY

The United Nations has defined people living in absolute poverty as persons living on less than one US dollar per day (Rs 45). 110 crore people today in the world are coming in this category. The  people all over the world living in absolute poverty has declined during  nineties  mainly due to substantial improvement in the standard of living in China.

The government of India has shown decline in people living in absolute poverty by manipulating statistics. The “decline” happened when large number of industrial  units have been closed down, number of days of work available to  workers has declined,  downsizing  of manpower had taken place in most of the  industrial undertakings and non-availability of jobs to the new entrant in employment market  is witnessed. Besides, there is an all round decline of prices of agricultural products, forcing farmers to suicide. In sectors like plantation and tea, workers are virtually starving. It is just not possible that people living in absolute poverty can decline in the country under these circumstances. The data in other countries show that such people have increased. Even according to World Bank data in Eastern Europe and Central Asia it has increased from 60 lakhs to 2 crores, during 1990 to 2000. In Latin America and Caribbean countries it has gone up from 4.8 crores to 5.6 crores. In Middle East and North Africa it rose from 50 lakhs to 80 lakhs. In Sub-Saharan Africa the persons living in absolute poverty  increased from 24.1 crores to 32.3 crores. Only in South Asia it has shown reduction from 46.6 crores to 43.2 crores. In spite of the manipulation of data by the Indian Government under NDA leadership  the fact remains that one third of the absolute poor live in India today.

After surveying 73 countries, which account for 59 per cent of the world population, in 48 countries, the World Commission has found that inequality has increased during the 30 years period, while in 16 countries inequality was static and only in case of 9 countries the inequality was declined. The dangerous consequences of globalisation are seen from this data.

Regarding the aid-dependent low income countries, mostly in Sub-Saharan Africa the World Commission has made the most damaging observation, “….many of these countries are still, some two decades later, caught in the debt trap they fell into  in the early 1980s. Most of the foreign help coming to the country is used only for repaying the debts in the past and there are no funds available for development of  economy!

The new global financial system created by globalisation has created several new problems for the world economy. “Invariably”, the World Commission observers, “the global financial system  has been plagued by a series of financial crisis of increasing frequency and severity. The negative impact of these crisis has been devastating, wiping out the gains of years of prior economic progress and inflicting heavy social costs through increased unemployment and poverty.”

The control of global production by multinational enterprises is one of the most detrimental outcomes of globalisation. As noted by the World Commission, “some 65,000 multinational enterprises with around 850,000 foreign affiliates” control a big sector of world capitalist production. They are now controlling “sub-contractors” who outsource to home workers.”

The speculative capital plays an important role in a globalised economy. The World Commission has admitted, “A basic structural flow has been the prominence of short term speculative flows  within the system. This has led to surges of capital inflows when the capital accounts are opened, which have  then been swiftly reversed. This has been  largely driven by a quest for short term speculative gains that has not only failed to contribute  to an increase in productive investment but has also created new constrains to development policy.” In India this phenomenon was clearly seen by share market manipulations by persons like Harshad Mehta, Ketan Parekh and several financial institutions who have minted money in speculative gains.

The power of foreign private capital over  the developing countries was explained by the World Commission in a clear cut terms. Noting how “private financial flows have come to dwarf official flows,” the World Commission further pointed out, “these private financial agencies now exert tremendous power over economic policies of developing countries especially the emerging market economy.” Thus  the right of  the developing countries to decide their economic policies get undermined. In India the NDA Government is actually carrying out the policies dictated to them by the World Bank and the IMF which is just threatening the economic and political sovereignty of the country.

CAN FINANCIAL GLOBALISATION GIVE A FAIR DEAL?

Though   the World Commission has factually brought to the forefront the dangerous consequences of present globalisation and  proposed changes in the policy of globalisation it does not make any recommendations that would basically alter the policies of globalisation. The World Commission states, “We believe the benefits of globalisation can be expanded, its results better shared; and many of its problems resolved.” It,  therefore, talks of  achieving “a fair globalisation” and “improved governance.”

It talks of implementation of commitments given in World Development Summit held at Copenhagen that 0.7% of GDP of advanced countries should be given as official developmental assistance to the developing countries. It stresses the need for debt-relief to the developing countries and international action to raise educational investment and technological capability of developing countries.

The World Commission recommended establishment of Global Policy Forum as a platform for regular dialogue between different points of view on the social impact of developments and policies in the global economy. It advocated voluntary private contributions and philanthropic endeavours for global assistance to developing countries.

The report gives more emphasis on NGOs and voluntary organizations to play a major role in making globalisation extend some benefits to the poorer sections of the society.

All these recommendations may help in giving some relief but it will not basically alter the anti-people character of globalisation. It is not possible to expect from a commission of this type to recommend drastic changes in the present policies of globalisation.

We cannot expect the World Bank and IMF to play the role of democratisation since they are imperialist agencies to control the world economy. The  multinational enterprises cannot give up their policies of exploiting the workers and the common people.

However, despite these shortcomings the World Commission has highlighted the role of globalisation in enhancing poverty in the developing countries and the growing inequality all over the world.

FIGHT FOR ALTERNATIVE POLICIES

Trade unions and democratic sections have therefore to carry forward their struggles against financial globalisation and fight for alternate policies that would serve the interest of the poor people. The struggle should focus on the main policy framework given below:

1. Full employment to be introduced all over the world. Unemployment allowance to those who are not provided with jobs

2.  Stringent measures to reduce global inequality by imposing more taxes on richer strata and passing of relief to the poorer sections

3. Moratorium on debt payment for developing countries so that their liabilities can be used for developmental purposes.

4. All the conditionalities imposed by IMF and the World Bank should be annulled.

5. All the clauses in WTO that are imposing  unfavourable restrictions on the developing countries should be renegotiated and changed in  favour of developing countries.

6. All restrictions imposed by the advanced capitalists countries to restrict entry of goods from developing countries should be withdrawn.

7. Policy of imposing economic blockades, military intervention to control the natural resources of the developing countries to be stopped.

8. Unity of developing countries should be strengthened so that united pressure can be brought on imperialist countries to defend the interests of the developing countries.

9. Popular movements should be developed by democratic parties, mass organizations to oppose the dictates of IMF and the World Bank all over the world.

10. The governments of developing countries who support imperialist machinations should be opposed so that they are not allowed to damage the national interests.

 The World Social Forum and other international gatherings have highlighted these issues and a powerful movement should be launched all over the world in defence of common interests of the people in the developing as well as developed countries so that the slogan “Another world is possible” can become a reality.

On this May Day the trade unions should express their firm determination to fight against the policies of globalisation and for popularising the alternate policies that would protect the interest of the working class and the toiling people all over the world.