faces of globalization f (2)

Faces of GlobalizationFaces of GlobalizationThe debate continues----------The debate continues----------

Avaniendra Chakravartty

The debate on globalization is The debate on globalization is fast becoming a debate on fast becoming a debate on

democracy and social justice democracy and social justice in a global economy.in a global economy.

World Commission on the Social World Commission on the Social Dimensions of GlobalizationDimensions of Globalization

International Labour OrganizationInternational Labour Organization20032003

Mainstream viewMainstream view

Globalization as a machinery for Globalization as a machinery for many of the problems such as many of the problems such as poverty, illiteracy, inequality poverty, illiteracy, inequality that beset the developing world.that beset the developing world.

What do the developing countries What do the developing countries need to do for the above need to do for the above developments-developments-

LiberalizationLiberalization: Open markets work best: Open markets work bestPrivatizationPrivatization: States shouldn: States shouldn’’t own t own

profitable sectors profitable sectors Enhance private sectorEnhance private sector: States should open : States should open

programs/services to private competition programs/services to private competition De-regulationDe-regulation: Few rules on private sector: Few rules on private sectorState minimalismState minimalism: Reduce public spending : Reduce public spending

& taxation, implement cost-recovery& taxation, implement cost-recoveryadapted from Milward, 2000, adapted from Milward, 2000, ““What is structural adjustment,What is structural adjustment,”” In Mohan, In Mohan, G., Brown, E., Milward, B. and Zack-Williams, A.B. G., Brown, E., Milward, B. and Zack-Williams, A.B. Structural adjustment: Structural adjustment: Theory, practice and impactsTheory, practice and impacts, London and New York: Routledge., London and New York: Routledge.

SAP’s General Requirements (neo-liberal economic assumptions)

Collapse of Communism eliminated the Collapse of Communism eliminated the external threat, and made global external threat, and made global capitalism again, as in the 1870s, capitalism again, as in the 1870s, entirely free to pursue unhindered its entirely free to pursue unhindered its objectives of profit maximization––objectives of profit maximization––without much regard for social without much regard for social consequences*.consequences*.

(Do poor countries make their own rules (Do poor countries make their own rules regarding trade, who makes the rules?)regarding trade, who makes the rules?)

*Branco Milanovic, WB, USA*Branco Milanovic, WB, USA

The Left viewThe Left view

Regards globalization as a malignant Regards globalization as a malignant force that leads to child labour in the force that leads to child labour in the South and takes away middle class South and takes away middle class jobs in the North.jobs in the North.

The left resents today's globalization's The left resents today's globalization's triumphant and often unbridled triumphant and often unbridled capitalism. capitalism.

From Colonization to GlobalizationFrom Colonization to GlobalizationEconomists who deal in models of individual Economists who deal in models of individual

rationale behaviour are not well equipped to treat rationale behaviour are not well equipped to treat conquests and plunder. Thus, they prefer to stick conquests and plunder. Thus, they prefer to stick to the “nice” face of globalization to describe to the “nice” face of globalization to describe how how the global working of the ‘‘invisible hand’’ brought the global working of the ‘‘invisible hand’’ brought late 19th century technological late 19th century technological marvels.marvels.

Globalization was brought to many at the ‘point of a Globalization was brought to many at the ‘point of a gun’. gun’.

No mention of the terms, “slavery, conquests, No mention of the terms, “slavery, conquests, colonialism” in mainstream globalization colonialism” in mainstream globalization literature.literature.

B B

Pro-Globalization Pro-Globalization ArgumentArgument

LiberalizationLiberalization Increases Growth Increases Growth Increased Growth Increased Growth Increases Wealth Increases WealthIncreased WealthIncreased Wealth Decreases Poverty Decreases PovertyDecreased PovertyDecreased Poverty Increases Health Increases HealthIncreased Health Increased Health Increases Growth Increases Growth

Globalization’s Counter-Globalization’s Counter-ArgumentsArguments

1.1. Rapid spread resistant diseases, Rapid spread resistant diseases, pandemic of Western lifestylespandemic of Western lifestyles

2.2. Tariff reductions hardest on poor Tariff reductions hardest on poor countries, reducing revenues for countries, reducing revenues for

health/social spendinghealth/social spending3.3. Growth for some, not for others Growth for some, not for others 4.4. Poverty reduction not automatic Poverty reduction not automatic

and even contentiousand even contentious5.5. Inequalities on the rapid riseInequalities on the rapid rise

Globalization drivers/mitigatorsGlobalization drivers/mitigators

1.1. Macroeconomic policies: structural Macroeconomic policies: structural adjustment loan conditions adjustment loan conditions

2.2. ‘‘Debt overhang’ of developing Debt overhang’ of developing countries, forcing an economic countries, forcing an economic subservience to the interests of subservience to the interests of wealthier nationswealthier nations

3.3. Global, regional and bilateral ‘free’ Global, regional and bilateral ‘free’ trade and investment agreementstrade and investment agreements

4.4. Development assistanceDevelopment assistance5.5. Global public goodsGlobal public goods

Two models of globalization:Two models of globalization:

Corporate globalization--Corporate globalization--

globalization from aboveglobalization from above

Democratic globalization--Democratic globalization--globalization from belowglobalization from below

Democratic Globalization:Democratic Globalization:Globalization from BelowGlobalization from Below

The World Social ForumThe World Social Forum

International Forum on GlobalizationInternational Forum on Globalization

The Third World NetworkThe Third World Network

People-centered Development ForumPeople-centered Development Forum

Susan George: Another World is PossibleSusan George: Another World is Possible

The Anti-Thomas Friedman Page The Anti-Thomas Friedman Page

Corporate Globalization:Corporate Globalization:Globalization from AboveGlobalization from Above

The World BankThe World Bank

The World Trade OrganizationThe World Trade Organization

The World Economic ForumThe World Economic Forum

World Business Council for Sustainable World Business Council for Sustainable DevelopmentDevelopment

Thomas Friedman: Senseless in Seattle Thomas Friedman: Senseless in Seattle (1999)(1999)

Three basic assumptions of Economic Three basic assumptions of Economic Growth Supporters (Korten)Growth Supporters (Korten)

1. Sustained economic growth is the key to 1. Sustained economic growth is the key to human progress.human progress.

2. Integration and globalization of the world 2. Integration and globalization of the world economy is a key to growth and beneficial to all economy is a key to growth and beneficial to all but a few narrow "special interests."but a few narrow "special interests."

3. International assistance and investment work 3. International assistance and investment work to build strong economies in less fortunate to build strong economies in less fortunate nationsnations

and are important to the progress of their people, and are important to the progress of their people, especially the poor. especially the poor.

The Corporate Libertarians basic assumptions The Corporate Libertarians basic assumptions of Corporate Globalization:of Corporate Globalization:

11. . Sustained economic growth , as Sustained economic growth , as measured by gross domestic product measured by gross domestic product (GDP), is the path to human progress.(GDP), is the path to human progress.

2. Free markets, unrestrained by 2. Free markets, unrestrained by governments, provide more and cheaper governments, provide more and cheaper goods and opportunities to all people. goods and opportunities to all people.

3.Free markets and free trade create greater3.Free markets and free trade create greaterrates of economic growth and wealth rates of economic growth and wealth

creation.creation.

The Corporate Libertarians basic assumptions of The Corporate Libertarians basic assumptions of Corporate Globalization:Corporate Globalization:

4- Economic Globalization, created by 4- Economic Globalization, created by removing the barriers to free trade and removing the barriers to free trade and free markets, to the free flow of goods and free markets, to the free flow of goods and services, and the free flow of capital and services, and the free flow of capital and finance increases economic growth, lowers finance increases economic growth, lowers consumer prices, creates more jobs, and consumer prices, creates more jobs, and provides more opportunities for all people.provides more opportunities for all people.

5-Privatization, removing many of the 5-Privatization, removing many of the functions of government and letting the functions of government and letting the private sector provide these services, such private sector provide these services, such as water, electricity, health, and schooling, as water, electricity, health, and schooling, lowers prices and costs and creates a lowers prices and costs and creates a higher quality of life.higher quality of life.


6-Deregulation6-Deregulation.. Corporations and Wealth Corporations and Wealth should be protected from government should be protected from government regulation and burdensomeregulation and burdensomehealth and environmental regulations.health and environmental regulations.

7 The7 The "invisible hand of the marketplace" "invisible hand of the marketplace"allows the individual pursuit of self-interestallows the individual pursuit of self-interestto maximize the public good. By earning to maximize the public good. By earning profits,profits,global corporations are helping all people global corporations are helping all people totohave better liveshave better lives. .


8- 8- ComparativeComparative Advantage Advantage allows countries to allows countries tocreate some products and services better thancreate some products and services better thanother countries, so that nations will try to other countries, so that nations will try to produceproducegoods that they have a comparative goods that they have a comparative advantage in.advantage in.

9- 9- Eliminate Trade BarriersEliminate Trade Barriers. Tariffs and import. Tariffs and importcontrols undermine global free trade and limit controls undermine global free trade and limit and undermine the creation of wealth and and undermine the creation of wealth and opportunity.opportunity.


10 Globalization. As long as global corporations are 10 Globalization. As long as global corporations are allowed to move money, jobs, and technology allowed to move money, jobs, and technology throughout the world in order to maximize theirthroughout the world in order to maximize theirprofits and governments limit taxes and regulationsprofits and governments limit taxes and regulationson corporations, the global economy will continueon corporations, the global economy will continueto growth.to growth.

11-11- Governments should be a supporter not Governments should be a supporter not an adversary to Global Corporationsan adversary to Global Corporations. Instead of. Instead oflimiting economic growth and corporate profitslimiting economic growth and corporate profitsthrough taxes and regulation, governments shouldthrough taxes and regulation, governments shouldwork with corporatins to increase growth andwork with corporatins to increase growth andprofits. profits.


12-Governments12-Governments should support Tax Breaks for the should support Tax Breaks for the Wealthy and Large CorporationsWealthy and Large Corporations. Because the . Because the wealthy and large global corporations create jobs wealthy and large global corporations create jobs and more wealth, governments should provide and more wealth, governments should provide tax breaks and economic incentives and support tax breaks and economic incentives and support for corporations.for corporations.

13- 13- Economic Growth reduces PovertyEconomic Growth reduces Poverty. Poverty. Povertyis created by lack of economic growth and is created by lack of economic growth and corporate investment. corporate investment.

14- 14- Only by working with global corporations canOnly by working with global corporations cangovernments encourage economic growth, thegovernments encourage economic growth, thecreation of wealth, and higher standards of creation of wealth, and higher standards of living.living.

What are the “rules” of globalizationWhat are the “rules” of globalization??Washington Consensus:Washington Consensus:1. Fiscal Discipline1. Fiscal Discipline2. Reorientation of public expenditures2. Reorientation of public expenditures3. Tax reform3. Tax reform4. Financial liberalization4. Financial liberalization5. Unified and competitive exchange 5. Unified and competitive exchange ratesrates6. Trade liberalization6. Trade liberalization7. Openness to Foreign Direct 7. Openness to Foreign Direct Investment (FDI)Investment (FDI)8. Privatization8. Privatization9. Deregulation9. Deregulation

A quick fix to globalization, add a new(!) set of rules to A quick fix to globalization, add a new(!) set of rules to the original WCthe original WC::

““Augmented” Washington Augmented” Washington Consensus:Consensus:10. Corporate governance10. Corporate governance11. Anti-corruption11. Anti-corruption12. Flexible labor markets12. Flexible labor markets13. WTO agreements13. WTO agreements14. Financial codes and standards14. Financial codes and standards15. “Prudent” capital account opening15. “Prudent” capital account opening16. Non-intermediate exchange rate regimes16. Non-intermediate exchange rate regimes17. Independent central banks/inflation 17. Independent central banks/inflation targetingtargeting18. Social safety nets18. Social safety nets19. Targeted poverty reduction19. Targeted poverty reduction

In this day, and almost universally, phrases such as ‘‘the free market,’’ ‘‘privatization,’’ less government and others like them have become the orthodoxy of globalization, its counterfeit universals. They are staples of the dominant discourse, designed to createconsent and tacit approval. . . The main goal of this dominant discourse is to fashion the merciless logic of corporate profit-making and political power into a normal state of affairs. (said 2002)

Capitalism left to itself will always produce effects Capitalism left to itself will always produce effects

like growth of slums, bad labour conditions etc.like growth of slums, bad labour conditions etc. If people want to sell themselves, why should not If people want to sell themselves, why should not

they?they? If parents do not want to send children to school, why If parents do not want to send children to school, why

notnotallow them the choice? allow them the choice?

If university education is no longer free, perhaps a If university education is no longer free, perhaps a child from a poor family can borrow to pay for it?child from a poor family can borrow to pay for it?

If people do not have money to pay for a cure or a If people do not have money to pay for a cure or a drug, what else can be done to ensure cost recovery? drug, what else can be done to ensure cost recovery? 2525

How to explain that after sustained involvement and many structural adjustment loans, and as many IMFs Stand-bys, African GDP per capita has not budged from its level of 20 years ago? Moreover, in 24 African countries, GDP per capita is less than in 1975, and in 12 countries even below its 1960s level. 28

How to explain the recurrence of Latin How to explain the recurrence of Latin crises, in countries such as crises, in countries such as Argentina, that months prior to the Argentina, that months prior to the outbreak of the crisis are being outbreak of the crisis are being praised as model reformerspraised as model reformers

How to explain that the best ‘‘pupils’’ How to explain that the best ‘‘pupils’’ among the transition countries among the transition countries (Moldova,Georgia, Kyrghyz Republic, (Moldova,Georgia, Kyrghyz Republic, Armenia) after setting out in 1991 Armenia) after setting out in 1991 with no debt at all, and following all with no debt at all, and following all the prescriptions of the IFIs, find the prescriptions of the IFIs, find themselves 10 years later with their themselves 10 years later with their GDPs halved and in need of debt-GDPs halved and in need of debt-forgiveness?forgiveness?

0 500 1000 1500 2000 2500 3000

US dollars

J apan annual dairy subsidy, per cowEU annual dairy subsidy, per cowPer capita annual income, sub-Saharan AfricaPer capita cost of package of essential health interventionsPer capita annual health expenditure, 63 low income countries

Would it be better to born a Japanese cow Would it be better to born a Japanese cow than an African citizen?than an African citizen?

Article in the Washington Post tried to answer the question why, more Article in the Washington Post tried to answer the question why, more than a decade after the end of Communism in the Soviet Union, than a decade after the end of Communism in the Soviet Union, and two decades after the rejection of Maoist legacy in China, a and two decades after the rejection of Maoist legacy in China, a Maoist movement in Nepal (a multi-party democracy) is making Maoist movement in Nepal (a multi-party democracy) is making progress and can claim support among most of Nepalese progress and can claim support among most of Nepalese peasantry. The explanation (Odenheimer, 2002) is worth quoting in peasantry. The explanation (Odenheimer, 2002) is worth quoting in extensor.extensor.

‘‘‘‘The World Bank and the International Monetary Fund The World Bank and the International Monetary Fund often made economic conditions worse for poor often made economic conditions worse for poor Nepalese. Heeding advice from the Bank and the IMF, Nepalese. Heeding advice from the Bank and the IMF, the Nepali government cut state subsidies, including the Nepali government cut state subsidies, including those that helped farmers buy fertilizer and seeds. The those that helped farmers buy fertilizer and seeds. The countrys education and health systems were privatized countrys education and health systems were privatized to the point that most Nepalese, even if they work 14-h to the point that most Nepalese, even if they work 14-h days, cannot afford to send their children to school or days, cannot afford to send their children to school or take them to the doctor when they are sick. Meanwhile, take them to the doctor when they are sick. Meanwhile, the World Bank supported huge hydroelectric and other the World Bank supported huge hydroelectric and other massive infrastructure projects that brought windfalls to massive infrastructure projects that brought windfalls to international companies and corrupt Nepali officials, international companies and corrupt Nepali officials, while utility costs for the average Nepali continued to while utility costs for the average Nepali continued to rise. In the face of this poverty and corruption, the rise. In the face of this poverty and corruption, the Maoists have been playing the role of Robin Hood. Maoists have been playing the role of Robin Hood.

faces of globalization f (2)

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