Globalisation Revisited

Euphoria of the past three decades over globalisation seems to have ended. More and more people including economists hitherto championing it are now questioning whether globalisation has delivered on its promises. Washington Post of 02 February 2008 has published the results of a survey in G-7 countries and 34 other countries. 57% of those polled in G-7 nations said that globalisation has moved too fast in the past few years. 64% of those polled in the other countries opined that the advantages and burdens of globalisation have not been shared fairly. In only 10 of the 34 countries, did the majority think that globalisation was a positive factor for local economic development. It is significant that this category included Russia, China OPEC members who benefited from soaring oil prices and the special cases of Canada and Australia. Even if doubts are raised about the credibility of such surveys, it is difficult to ignore the core concerns thrown up by the debates among the economists and international development agencies about the impact of globalisation on equality in and between nations.

In this context, note must be taken of the UNDP’s World Development Report, 2006, United Nation’s Report on the World Social Situation, IMF’s Report entitled World Economic Outlook, 2007 and OECD’s Employment Outlook, 2007. All the four reports highlighted the growing inequalities within and between nations and the links of this phenomena with globalisation. Some of them have called for new policies aimed at better distribution of incomes. In other words, the Report emphasizes the need for state action to correct the distortions brought out by the untramelled market forces. Writing in Foreign Affairs, 2007, two economists, Kenneth F Scheve and Mathew J. Slaughter (the latter was a member of President Bush’s Council of Economic Advisors, 2005-07), called for a ‘New Deal’ for globalisation, so as to enable the majority of people and nations to have a reasonable share in the benefits of globalisation. Further, a reputed World System Analyst, Immanuel Wallerstein has predicted the end of neo-liberal globalisation while his ideological opposite, Stephen Roach of Morgan Stanley sees an about turn in favour of what he calls localisation. In their opinion, globalisation will be viewed in future as a mere phase of cyclical movement.

That globalisation had thrown up challenges for development, particularly in developing countries is further evident from the decision of United Conference on Trade and Development (UNCTAD) to hold an international conference soon in Accra (Ghana, Africa) with a view to identify appropriate strategies. The ground paper circulated in this context points out that the current boom in export revenues as a result of globalisation has not only to be continued and stabilised but also to be accompanied by a well-thought out scheme of domestic allocations in the interest of inclusive development of all classes of people and greater equality. This calls for crucial state intervention and regulation of market forces.

Broadly speaking, social and economic policies under the banner of globalisation have the following features: maximum free play for market forces; free movement of goods and services, capital and labour across states; little or no intervention by the state; and stress on exports and foreign investment. In actual practice, however, several states have found it necessary to put restrictions from time to time on migration of labour and movement of capital. It is well known how the free movement of hot capital led to crisis in some East Asian Countries and how many developed countries introduced curbs on immigration from poorer countries. Equally evident is the fact that the rich in all countries have become richer while the poor have improved their condition only marginally. Experience has also shown that speedy globalisation and complete freedom to the market forces have resulted in disaster particularly for the poor in developing countries. It is, therefore, not surprising that the initial enthusiasm for globalisation has begun to wane and a revisit to the various issues concerned has become compelling.

There are some other issues driven by technology that need to be considered. First, environmental concerns, in particular, climate change projected by the relevant UN Agency are crying for attention and immediate action. The concept of global village, the creature of information technology, has to be deepened and expanded into the concept of a global family. It may be recalled that Prime Minister Indira Gandhi, speaking at the first international conference on environment, invoked the vedic aphorism Vasudhaiva Kutumbakam. To reach and own that noble ideal, the mind set of the different people and their leaders has to be radically transformed. Although the process will undoubtedly take time, a beginning has to be made now.

How far we are at present from the idea of a global family may be illustrated by the Western World’s reactions to the current unprecedented rise in prices of crude oil and food articles. The International Energy Agency, dominated by the West, tried to blame the rising demand from emerging nations like China and India for the present steep rise and the projected level of $159 per barrel by 2030. It has blithely ignored the complexity of the phenomenon and factors like the American invasion of Iraq in 2002, rampant speculation and the modest nature (1.5% only) of the recorded rise of demand in 2007-08 on year-on-year basis, from the emerging economies. Regarding food prices, President Bush of USA has tried to pin the responsibility for higher food prices on the nearly 300 million strong middle class of India, almost equal to the total population of USA, whose demand for high quality foods has been rising steeply. He did not care to mention the over-eating and wrong-eating habits of his fellow citizens and the consequent rise in the occurrence of obesity and other life style diseases in his own country. In contrast, Baba Ramdev of Patanjali Yoga Institute of India deplored the fact that many of the middle class approach him for advice on slimming instead of changing their eating habits. Note may also be taken in this context of the rates of growth of consumption of cereals between 2006-07 and 2007-08, calculated by Food and Agriculture Organisation (FAO) of UNO are 11.81% for USA and 2.17% for India. Wonders what may happen if and when one of the goals of Millennium Development Goals (MDG) of UNO viz., halving by 2015 the number of the world’s poor (that is, those earning one US dollar or less) is actually achieved. Readers may decide how inappropriate is the attitude of the American President from the standpoint of a member of the global family.

High quality foods, I understand, mean pork and beef. A spurt in demand for them will certainly lead to a large scale diversion of cereals for animal feeds. According to experts, producing a kilo of pork and beef required 3 and 7 kilos of grains respectively. Thus, the pressures on the foods of the poor are sure to mount if the people of emerging economies like China and India demand more and more of the so called high quality foods. There is thus a strong case for the global village evolving a wholistic world-wide plan for production and consumption of cereals. At any rate the present blame game must stop, as befits the members of the truly global family.

To sum up, globalisation policies which have unleashed entrepreneurial energies of several individuals, increased export revenues for many countries, encouraged the off-shoring and outsourcing across nations and brought about other benefits of growth, have nevertheless, failed to spread the benefits fairly among and within the nations of the world. The inequalities that have been enhanced have compelled a new look at the basket of policies hitherto recommended and followed. The social fabric has come under danger. In this context, the states have a crucial role to play to bring about social inclusion. There are other matters, besides incomes or purchasing power, that determine social stability. They are education, health care and other items that help build capacities of people to face challenges. Further, rule of law and other state structures that help build a sense of trust in society are equally important. Think globally and act locally, keeping always in mind the condition of the local people is the new mantra. Governments of states can no longer afford to leave matters to the supposed infallibility of global market forces. They must act thoughtfully and decisively.