PHA-Exchange> Yes, it is easy to have simplistic views about Globalization...(1)

[Claudio Schuftan]

GLOBALIZATION, OR THE FABLE OF THE MONGOOSE AND THE SNAKE:

              What is history, but a fable agreed upon?
                        Peter Hoeg (1)


Globalization and its negative consequences:

The peculiar current form of Capitalism rechristened as 'free market
economics' rules in the vast majority of countries as our century draws to a
close. This paradigm  --at the core of the transnational liberal order-- has
become the current hegemonic development philosophy as well.  It goes by the
motto of  "trade, not aid", no matter how uneven the former may be.

Globalization --the new Capitalism's flagship-- denotes the ability of
international capital and transnational corporations to switch investments
across the globe.  In doing so, Globalization creates wealth for the few and
depresses local wages and conditions of employment for the many.

Globalization has brought about a shift in power: the nation state has
weakened and there is a reduction in social accountability.
This makes sovereign states row rather than steer in the process of
development, i.e. if countries do not intensely participate in this paradigm
set by the North, they are "out".  As a consequence, the poor countries'
very right to development is threatened by this unrelenting liberalization/
globalization process. (2) (3)

Globalization has put the fate of those many in the hands of large
corporations.  Although the 'corporocracy' (or 'corporarchy' of Robin Sharp)
very well knows the negative effects of Globalization, few of them are
committed to change.   They tend to ignore the root causes of the social
problems they see as patently as everyone else, but seldom address the
negative social impacts of their activities. Since they lack the openness
and transparency required, they pay only lip service to change and seldom
change their practices (or change them in very marginal ways). (4)

Moreover --in the dealings of Globalization-its intricate connections are so
patently disguised as to become almost invisible. Or worse, the deceptions
are so brilliantly woven into its processes that falling for those
deceptions is deemed as both fashionable and progressive. (5) (6)

In the Globalization context, the privatization called for often ends up
meaning denationalization with Globalization further pursuing a removal of
trade barriers, (often dependence creating) technology change, and a rise in
consumerism.  This, on top of being rightly singled out as additionally
creating and accelerating poverty, disparities, exclusion, unemployment,
alienation, environmental degradation, exploitation, corruption, violence
and conflict. (7) (8)

Not by accident then, has Globalization been called "the imperialism of the
1990's".  (What is different between imperialism and globalization is just
the latter's speed of expansion).

Because the Globalization of the economy brings about marginalization on a
massive scale and economic and political domination of a magnitude not seen
since the days of colonialism, it is turning in to a process of
Globalization of poverty and of an intensification of the plunder of the
neo-colonies. The effects of Globalization are thus terribly uneven and
produce big winners and losers. (9) (6) (2)

Due to these negative consequences of Globalization, communities in many
Third World countries are no longer able to cope --their previously
successful coping strategies diminishing daily.  The immediate challenge is
to bolster the same communities' coping strategies so they can continue to
help themselves under the new set of rapidly changing circumstances. (10)

Even business executives espousing Globalization are aware of its negative
effects.  An Asian executives poll carried out by the Far Eastern Economic
Review in November of 1997 (p.38) showed 71% of the business leaders polled
across the region agreeing that the benefits of Globalization had not been
equitably distributed in their respective countries.  48% were of the
opinion that Globalization had widened income disparities  in their
countries.  50% said that it was contributing to social tensions and 60%
said their respective governments were not doing enough to help those hurt
by Globalization.

More surprising yet is the IMF's very own overall view on Globalization. For
them, the latter links labor, production and capital markets of economies
around the world.  They do accept that it leads to sharp 'short-run' changes
in the distribution of income. They further accept that Globalization is to
blame for growing inequalities in developed countries as well.  For example,
to them, Globalization limits the ability of union workers to bargain, as
well as making it more difficult for governments to implement equitable
policies. (11)

Because they are unable to do the latter, governments in the Third World are
simply assumed to be incapable of assuming a minimum level of welfare for
their citizen.  Fitting the ideology, it is then implied that it is
necessary to look for alternatives in the private sector or to directly
privatize services (and NGOs are occasionally a convenient form of
privatization). Only that, often, such privatization strategies lower the
quality of services for the poor and end up widening the gap between the
rich and poor.  The alternative that is being written off a-priori is the
need to improve the state's credibility, accountability and responsiveness
to welfare matters.(*)
[(*): After all, the extraordinary and more equitable growth of Vietnam and
China contradicts the view that a state control of the economy and the
market is inimical to growth].
One has to acknowledge that most governments have not adopted the right
strategies.  But let us not develop yet new ones; let us make governments
adopt and adapt the right and proven pro-poor strategies providing them with
a set of options, and not a single pathway.  Sustainable solutions proposed
need to be sound and appropriate both in the way things will be done as much
as in what to be done. (8)

At this point, we hardly need to be reminded of the hard facts documenting
the negative effects of Globalization.  Tid bits of the evidence should
suffice to close this quick, maybe caricaturized, review of its negative
consequences:
-Under Globalization, the annual losses to developing countries run at an
 estimated $500 billion --an amount much higher than what they receive in
 foreign aid.
-As a consequence, developing countries have had a series of years of
 consecutive negative  financial flows; this is equivalent to at least seven
 years of an economic hemorrhage.
-From 1960-99, there has been a 60% fall in the prices of commodities other
 than oil!  This has resulted in a reduction of two thirds in the buying
power
 of developing countries. (12)
-As a result, the number of hungry people around the world keeps rising
 every year and poverty is becoming increasingly feminized (70% of all the
 poor are women). Free trade has been free for business and industry, but
not
 for women and the poor. New technologies have not shown to have intrinsic
 pro-poor or pro-women positive effects either, although they have such a
 potential (which unless we help steer in that direction will invariably
continue favoring the already wealthy and male).  Therefore, any genuinely
poverty-redressing policy is bound to be a gender-oriented policy.

A dearth of workable solutions?

There is no single universal solution in sight that will promote just the
benefits of Globalization to all people: giving the same advice to everyone
simply has not and will not work; this is what has been called "the fallacy
of composition".

A balanced and realistic value-free response to Globalization is difficult,
especially if one considers the current reality of a unipolar world with a
North-centered and North/transnationals-dominated economic order. (13)

On the one hand, the transnational corporations cannot be allowed to
continue to duck and dive, invest in smoke screens, espouse gradualist
solutions and attempt to derive maximum publicity from piecemeal changes.
They must be persuaded, cajoled or even forced to change.
On the other hand , new insights are emerging as to the appropriate mix of
market and government activities needed to complement each other. (4)

Whatever the response, promoting the economic benefits of Globalization
requires mechanisms to prevent its excesses, because there is a clear
trade-off between market efficiency and the social welfare of workers and
peasants.

Turning again to the IMF, they see the policy responses to counter
Globalization  to include a mix of two elements:
a) 'safety net interventions' such as targeted subsidies, cash
compensations,
 severance payments to and retraining of sacked employees, wage subsidies,
 and public works programs, and
b) 'fiscal policies' (the most direct tool of redistribution) such as
levying
 highly progressive taxes, distribution of shares in privatized enterprises,
and
 increased government spending in health and education (i.e. reallocation of
 spending to the social sector), as well as higher minimum wages, good
 unemployment benefits, job protection, keeping inflation low, subsidizing
 lower quality commodities, and giving better access to credit, justice and
 public services.  (11)
How this is to be achieved, and whether the IMF plans to go for broke for
these changes remains unsaid in the source here cited.

The truth is that, in the real world, the more radical visions or
sustainable solutions calling for deeper social and environmental change
have been diluted or silenced further with the onslaught of Globalization.
In a mix of insensibility and unresponsive, the prevalent attitude has been
to selectively reject (depending on the bias) the main features of any
criticism and to keep important issues from surfacing to critical
consciousness.  This is what has been called "the exclusion fallacy" (".if
we have not considered it, it is not important.").

In the international scene of (mercenary) technical development assistance,
for example, issues of substance are turned into technical matters by paid
consultants while underlying more structural issues get obfuscated. Or, what
amounts to the same, aid agencies too often remain unwilling to respond
politically to political situations. (3)

(contd next email)

Claudio
aviva at netnam.vn