August 23, 2006

The Real Problem with Globalisation

India Nest, 20.08.2006

If you utter the word ‘globalization’ among educated circles these days, you get a overtly enthusiastic response– either making sweeping statements about the possible environmental degradations and inequities that it precipitates, or listing its boost to entrepreneurship and upward social mobility in developing countries. Both these arguments miss the key issue. The most potent and long–lasting effect of globalization as it stands today has been on the realm of ideas that has been straitjacketed into a certain mould, which reduces options for weaker countries to devise their own solutions to the various perplexing problems that they face.

Stephen Gill has defined knowledge as “the principle form of production and power resource”. Following on, it can be argued that particular ideas which have been privileged in the globalization discourse must hold sway over the policy processes in poorer countries which increasingly look for models to emulate from the developed world. Being in possession of most of the knowledge circulating in the public policy realm, the developed countries on the whole are in a unique position to control the ideologies and mentalities of the global ideational system.

We are often fooled by the façade of relative power. China, we are told, exports a humungous amount of goods to the world, and it is a developing country. However, it is not the export of toys and machines that make a state fundamentally powerful. The World Trade Organization is the agency that exports transnational regulatory institutions to its member states. We know that the WTO is dominated by a narrow set of ideas and attitudes. The world economic system is set up in such a manner that to maximize gains from trade, a state has to go via the WTO policy regime. And therein lies the “structural power” of supposedly global– but in fact ideationally very local– institutions like the WTO.

The ideological reach of this predatory globalization is not limited to concrete policy propositions between states alone. There are what many label “soft transfers” between non–state actors such as multinational corporations and non–governmental organizations. Therefore, the various management models and corporate structures that are being emulated by companies in the developing world are equally part of this hegemonic discourse as the ideological imports of the NGOs that protest against these very companies. The power of the British Broadcasting Corporation and Cable News Network should not be ignored too.

In other words, your laptop may have a “Made in China” label on it, but the various technologies that have been mastered to manufacture it, and the production techniques and management structures followed by the manufacturing company are invariably “Made in USA” or “Made in Japan”. The undisputed status of English as the lingua franca of the world is also part of this standardization process. Linguistic theory since the 1980s has argued that the language we use can shape the structure of our thought and the terms that we debate in. This power of globalization goes largely unnoticed.

The antithesis to this argument has been pointed out by Samuel Huntington who has pointed out that “drinking Coca Cola does not make Russians think like Americans.” Similarly, it is often said that globalization in reality leads to ‘glocalisation’. For example, multinational companies often have to alter their marketing strategies according to the cultural tastes of a particular country. However, this ignores the fact that the hegemonic presence of Western brands not only homogenizes the structure of the market globally, but also creates an illusion of superiority for such products. The newfound consumer culture in China and India and the hankering for foreign goods is a good example of this tendency.

The state as the monopoly of political power within defined borders is undergoing broadly similar transformations across the world as a result of globalization, and this reduces space for individual states to shape their own political systems. For example, austerity programs of the International Monetary Fund often forces states to adjust their political and economic system to a neo–liberal model in order to receive financial aid in a crisis situation. Prior to the Asian Financial Crisis, the IMF forced the countries in the region to liberalize their financial systems, despite savings rates being 20–22% higher in these countries vis–àvis Western Europe and the United States. On the other hand, the developed world through the WTO– often influences the trade policies of developing countries that have few choices but to join the global system. China and India were markedly different– both economically as well as politically– prior to their enmeshing in the global economic system. Now both China and India have a broadly similar economic system, and they are converging even further.

So–called ‘international norms’ play a major role in states across the world altering their policies to the ‘global’ practices of governance. The Heritage Foundation publishes an annual Index of Economic Freedom, while Freedom House publishes an annual Freedom in the World survey. Rating agencies like Standard & Poor and Moody’s ‘mark’ individual countries on their policies. The criteria for judging the policies of all these markedly different countries is rather inflexible, and no country would want to risk bad press, since they are falling over each other to attract foreign direct investment.

There have been some suggestions– notably by Randall Germain– that the developing states had re–instated themselves in lieu of the Asian Financial Crisis of 1997, and that in turn has forced the transnational forces acting on them to adjust to their changed stance. As an example we can look at the increasingly assertive stance of the Group of 20 (G–20) countries at the WTO negotiations. Moreover, the World Bank has been forced to amend its Comprehensive Development Framework after the crisis to be more sensitive to social needs of countries. This power shift, however, is relative merely. The “decision–making structures of the global economy” have not changed significantly, and the developing countries operate within the framework set for them by transnational commercial interests and international institutions which are heavily influenced by developed countries.

Immanuel Kant once spoke of the “moral unity of mankind”. However, unity is achieved through the equal consent of all participants and their equal contribution. Globalization – in its current avatar – does not offer developing countries the chance to make their own choices about major economic and political policies. Ardent neo–liberals would counter the above–mentioned argument by suggesting that poor labor standards and inadequate environmental regulations are in fact a source of negative marketing for countries, and hence they would not do it. Marxist critiques, on the other hand, would present a diametrically opposite argument.

What is forgotten in this quibble is that the poor countries have no say in this ideational battle– they are obliged to accept the dominant ethos of the time– in our case neo–liberalism. Orthodox Marxists often espouse Antonio Gramsci and argue for a counter–hegemonic discourse to be launched against neo–liberal structures of knowledge. The problem for them is that they too are working within a Foucauldian discourse. In other words, inexplicitly they are part of the very discourse they are trying to wriggle out of. The terminologies used to criticize neo–liberalism have nothing to do with the ideologies of the developing countries. They are stuck between two world views– the neo–liberal and the Marxist/radical. Their policy processes, in the meantime, get continuously compromised due to influences by the all–encompassing globalization process that brings the dominant ideology with it.

- 2 comments by 1 or more people Not publicly viewable

  1. I am very fearful of globalisation (with an 's' because we're English, please!!). Don't get me wrong, I am no closet socialist, but globalisation is being permitted to occur, I believe, because it suits big business. Certainly, in the short term, it looks good and everybody can stand back and clap and say 'good show' because it allows for a bit more competition. That's how it's being sold to us. In the short term.

    In the long term, economies of scale start to kick in and competition starts to dry up as the bigger players in the market are able to drive out the smaller organisations (eg Tescos and the corner shops). Now, instead of having national monopolies you get regional or global monopolies. And suddenly, you have no competition, higher prices, and jobs that were being done in one country are now moved to another to follow the cost of living (eg IT/call centre jobs that go to India, meaning that British jobs are lost). And companies are on record as saying this is a 'good thing' and that when India gets too expensive the companies will put Indians out of work and take the jobs to, say, Nepal, or Kenya. The directors have a duty to maximise shareholder value and, as they are themselves shareholders, they unfortunately benefit from the increased profits.

    Uncontrolled capitalism is an ugly animal but, presently, I do not see it being reined in. I'm not saying stop it, but just back it off a bit, will you?

    23 Aug 2006, 11:13

  2. Actually, I believe that economically, globalisation has provided a lot of opportunities to entrepreneurs in developing countries. Developing strong regulatory frameworks can reduce monopolistic tendencies. However, the problem I have is more philosophical and ideational– developing countries just don't have the space to develop their own developmental models.

    23 Aug 2006, 12:34

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