The 'Globalization' of economy has become a buzz word. All over the world, people are pitted against each other to see who will offer global corporations the lowest labor, social and environment costs. It has offered some exotic products, reduced some prices and opened up dazzling new opportunities for some people. It has immensely increased the wealth and power of a few hundred global corporations.
But an incisive examination done here through cutting across the corporate hype and hoopla, concludes that for the majority of people in most nation-states, this era of globalization has endured rising unemployment, falling real incomes, mass layoffs, cut back in public services, deteriorating working conditions, elimination of small farms and industries, accelerating the destruction of environments and loss of democratic control over their governments and societies. - Similarly, the World Bank is a unique invention of the second half of twentieth century. It is described as a kind of "quintessential Evil Empire." The writers make an analogy: this supranational, non-democratic institution functions like a Church, in fact the medieval Church. It has a doctrine, a rigidly structured hierarchy and imposing its doctrines with a quasi-religious mode of self-justification. Religion, by definition, cannot be validated or invalidated, declared true or false - but only to be believed or rejected. Facts are irrelevant to belief. The World Bank's concept of development has acquired a religious status. Bank is accepted as a Vatican, the Mecca or Kremlin of this twentieth century's new religion. The Bank's charter affirms that it is purely an economic institution, but the billions of dollars it lends are only part of the story: it has been wielding immense political power as well. The bank has now more say in state policies of nations than those states themselves. It has come to be a 'supranational' agency.
These two phenomena - the world bank and global corporate agenda - are two hot topics discussed by above critics threadbare in the two books. Their analysis assumes much more significance in the background of a defeated concept of North-South dialogue and the non-aligned movement's goal of 'establishing an equitable international economic order' as conceived before a few years.
Globalization is an immensely complex process, involving virtually every aspect of global life. Much of this process cannot be seen: secret negotiations, wheeling and dealing, corporate alliances hidden in corporate book-keeping. As the supranational institutions like IMF, World Bank, WTO have become powerful, the vehicles for struggle against poverty, unemployment, inequality, economic stagnation and environmental degradation such as national social movements of the past two centuries have lost their effectiveness. "The powers established through such national movements has been largely out-flanked by globalization", say the authors. When, how much and to whom the billions of dollars are lent and under what expectations ? From its inception through 1993, International Bank for Reconstruction and Development (IBRD) loaned $235 billion in more than 3,500 loans. Its all time large borrowers are in descending order: Mexico - which displaced traditional front runner India in 1993; India, Brazil, Indonesia, Turkey, China, Philippines, Argentina, Korea, Colombia, Morocco and Nigeria. The bank never reschedules or cancels its loan. Interest rate is on average 7.5 percent. In addition, International Development Association lent 'soft loans' to poor countries: about $78 billion. More than forty countries are considered eligible for their loans - including India and China. Its terms are indeed soft (1/4 percent). By 1993, India had borrowed nearly $28 billion from the Bank and another $20 billion from the IDA. What the Bank calls its 'non-project' or 'policy based' loans is known as 'structural adjustment' lending. About 15 to 20% of their total loans go for structural lending.
The globalization process is like a race to the bottom, assert the authors. There are no international equivalents to anti-monopoly or consumer protection or such other laws governing the global companies. The Bank of Commerce and Credit International scandals reveal just how much "freedom" global corporations have to engage in anti-social, not to say downright criminal, activities. They are unaccountable. Regional and global trade agreements restrict the sovereignty of national, state and local governments. Globalization represents an epochal change, but it is not the final change. It can be considered as the latest phase in the long history of changing relations between the political and economic dimensions of life.
It was in 1970s that Third World came out with an alternative system of global regulation. Working through the UNCTAD, they called for North-South dialogue. They advocated price and production policies and long-term sales agreements designed to stabilize the prices of commodities they produced. They did not propose to replace capitalism, but they did insist that world economy be managed to support the development and relative self-reliance of poorer countries. This dialogue culminated in Cancun conference in 1981, where South Commission Chairman Julius Nyerere recalls Reagan said "NO" and that was the end. New strategy devised by corporations was capital mobility. Export processing zones in Third World mooted by them provided a big door to move their assets to distant lands without much to worry about environment or high wages and high land prices or custom duties. Those large corporations who had once promoted nationally regulated capitalism abandoned this tactic. New strategy emerged to overcome this obstacle. This corporate agenda has many synonyms: monetarism, deregulation, laissez-faire, neo-liberalism, supply-side economics, etc.
Most Third World countries, including India, abandoned the pursuit of a more just international economic order and instead acceded to virtually any conditions in exchange for loan renewals. This "shock therapy" included reduction in government spending on health, education, food supply, fertilizers, etc; severely constraining the rise in wages to make exports more competitive; liberalizing imports; removing restrictions on foreign investment; devaluating the local currency and privatizing state enterprises.
"New International Trinity" - World Bank, IMF and WTO - control most power of the national governments. It has no police, no military control, no direct colonial rule, no need to dominate whole country under foreign rue. But its ability to impose its rules proved very effective. Who controls the army of WB economists ? Out of the 7,000 staff members of the Bank in 1993, Americans were 16 %, French 13.7 %, British 13.5 %, Canadian 8.3%, German 7.3 %, Japan 4.2 %. In 1993, no developing country supplied more than a fraction of one percent of these consultants - except for India with 1.3 %. The downward spiral caused by corporate globalization is reflected in the slowing of global GNP growth from almost 5 % per year from 1948 to 1973 to one half that in the 1974-1989 period and to a mere crawl since then. Against such corporate globalization, what is suggested by the authors after surveying various national movements against corporate agenda, is to create a globalization from below or people's internationalism. This new strategy can force reversal of downward leveling. It can support global rules that could protect labor, environment rights and women and children's rights, and oppose the corporate agenda.
Global institutions must be democratic, transparent, accountable and accessible to the public. Most controversial idea mooted by the authors here is on upward leveling that would require international rules that empower people at the grass-root level -"even if this limit aspects of national sovereignty." This means, the current push by some Western protagonists of global order for child-labor abolition, environmental laws to be enforced and labor protection laws - will have to be accepted by the Third World ! This again comes into clash with Third World demand at present for separating labor and other laws from trade and market rules. In that sense, despite vehement criticism made by the authors against corporate agenda, it does not recognize the Third World right of absolute sovereignty.
On the other hand, Faith & Credit attacks the World Bank ideology. Giving an example how the WB looks at a successful economic performance of a Third World nation, Zimbabwe stands out at the top. New York Prof. Colin Stoneman's study on Zimbabwe is revealing. Between independence in 1980 and 1987, Zimbabwe received 9 WB loans plus $646 as 4 IDA credits. This country did remarkably well despite domestic problems, drought, etc, that destroyed its tourism industry. But the government applied 'nationalistic' - not socialistic'- policies and performed quite well - without any structural adjustments. It protected its infant industries and local suppliers. It became self-sufficient in food. It started selling even wine to Europe. It was growing two-three times of average African growth rate. Then came a question of lending for export of manufactured goods. WB economists at lower level prepared a loan but at the top level, it was turned down "on ideological grounds" - asserted Prof. Stoneman.
Marvin Harris wrote an interesting book called "Cows, Pigs, Wars and Witches" published by New York's Random House. It draws a graphic scenario of big men versus natives. Native Yali's ambition is to understand why some societies are super rich, with motorcycles and matches, tinned meat and super computers, rice in bags and jet planes and some have hardly any food and have famished children and sunken beauties. What Yali terms as 'cargo' the WB calls 'development.' Yali sees lots of cargo in America and wishes someday if it falls from heaven to his land nobody would die of want. But the definition of 'development' given and repeatedly rehashed by the WB is different than what the people generally believe. What is described by the authors is a 'development debacle' of the century that wrought havoc throughout 1980s and 1990s. The grim cycle of over-borrowing, volatile interest rates, unpayable loans, huge deficits and ensuing austerity of 'structural adjustment' have drastically set dozens of countries downward. Mexico is the latest example. Every year an extra $90 to $115 billion was to enter the coffers of the borrowing countries in the form of new loans in the 1980s. The authors of this fascinating study draws in one whole chapter a character of Lawrence Summers- the top WB executive for few years - and titles him as a "fundamentalist freedom fighter!". He interprets Bank's policies in the style of Islamic or Christian fundamentalists.
In a record of the anti-global agenda movements the authors cite such coalition movements as anti-NAFTA with Zapatista National Liberation Army of Mexico at the top; hundreds of thousands of French students battling police to oppose a decree paying only 30 to 80 percent of the minimum wage; half a million Karnataka farmers in Bangalore, India, protesting against certain GATT provisions and representatives from Eithiopia, Nicaragua, Brazil, Indonesia, Korea and Zimbabwe joining them in "Seed Satyagraha"; workers in Belgium calling for a general strike, their first since 1936, to protest the government freezing of their wages and cutoff of welfare benefits; Polish people changed the parties that advocated "shock therapy"; over a million Europeans joined demonstrations in 150 cities against rising unemployment; etc. Both the books come at a very opportune moment in the history of development. All students of economy and development must read them.
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