"The menace of globalization" ... for the Poor?

[Dharma Tejus <dtejus@yahoo.com>]

---------------------------------------------------------------------
Please help make the Manifesto better, or accept it, and propagate it!
---------------------------------------------------------------------
 The menace of globalization

 By Dr Mubashir Hasan, Karachi Dawn


 THE United States and its European and Japanese allies, wanting to
impose
 upon the Third World a new economic and political order, are exerting
 tremendous pressure on poor countries to swallow their strong
medication
 which unfortunately has a poor record of healing.

 The new order's economic package consists mainly of lowering trade and
 tariff barriers, eliminating state subsidies, deregulating economies,
 establishing a free-market regimen, and dismantling public ownership
of
 means of production and distribution. The political package consists
of
 buying elected governments dominated by big money and supported by an
 appropriate cast of middle classes.

 The new world order is a threat, in many ways akin to the one posed by
the
 English 200 years ago. Naom Chomsky (Profit over People, Madhyam
Books,
 1999), drawing attention to only a single part of that infamous
offensive,
 reminds us that the English imperial power had imposed on the richest
part
 of India what it called "the Permanent Settlement." Forty years later,
an
 official commission had concluded that "the settlement fashioned with
great
 care and deliberation has unfortunately subjected the lower classes to
most
 grievous oppression... leaving misery that hardly finds a parallel in
the
 history of commerce", as "the bones of the cotton-weavers are
bleaching the
 plains of India."

 However, the British governor-general concluded otherwise. In his
minutes he
 observed that "the Permanent Settlement," though a failure in many
other
 respects and in most important essentials, had this "great advantage,
at
 least, of having created a vast body of rich landed proprietors deeply
 interested in continuance of the British Dominion and having complete
 command over the mass of the people."

 The contemporary imperial onslaught is of no less magnitude. Today,
the big
 financial and industrial powers of the world are creating a vast body
of
 super-rich industrial and financial magnates in Third World countries
who,
 as agents, are dedicated to ushering in the new economic and political
 order. At the disposal of the super-rich of the Third World are huge
sums of
 money to buy and influence governments, politicians and national media
and
 to lure the cream of the conscious part of the so-called "civil
society"
 through financing an ever-expanding network of certain type of NGOs to
 muster political support for their doctrine.

 Bowing before the onslaught of privatization, deregulation and
globalization
 means a massive increase in social and economic inequality, a marked
 increase in deprivation of the poor sections of society, a disastrous
effect
 on the environment, an unstable national economy, unprecedented
enrichment
 of the already wealthy and an upsurge of undemocratic tendencies. No
country
 has escaped it. In Pakistan, the process of privatization,
deregulation and
 globalization got started in the early '80s during Ziaul Haq's
government.
 The governments that followed accelerated the process. Prime Minister
 Benazir Bhutto supinely signed the WTO charter and started following
its
 dictates with precipitous haste.

 Prime Minister Nawaz Sharif virtually made the Pakistani rupee
convertible
 and started selling public assets built over half a century at
throwaway
 prices. Political and economic havoc was the result. "In terms of both
GDP
 growth rate and income generation openings, the economy has halted to
the
 extent that poverty has increased in Pakistan more promptly than
ever... If
 we fix 2,500 calorie intakes as an indicator of nutrition, 17 per cent
of
 the populace were deprived in 1987, but now the ratio has shot up to
30 per
 cent. It implies that one-third of the population has not much to
eat", says
 eminent Pakistani economist, Dr Akmal Hussain. The Pakistani rupee
plummeted
 from less than Rs 10 to a US dollar in the '80s to more than 50 in the
'90s.

 The twin menace of inflation and unemployment raised its big head.
 Governance was deeply scarred as there was an unprecedented decline in
the
 power of the state and its capacity to govern. There was a horrendous
 increase in crimes by society and the state. The rule of law weakened,
 liberal democratic forces retreated and the centrists and the
left-of-centre
 forces were thrown into the back seat. The forces of fundamentalism
emerged
 stronger than ever before. Predatory elites seized power. During the
last 12
 yeas, Pakistan has had five prime ministers, three caretaker prime
ministers
 and four general elections and now a military chief executive as head
of
 government.

 Since the time of the dictator, Ziaul Haq, corrupt civilian
administrations,
 dedicated to privatization, deregulation and globalization, were
lavishly
 supported from the coffers of the Brettonwoods institutions. On one
single
 evening, television viewers in Pakistan saw their prime minister and
US
 energy secretary watch the signing of eight memoranda of understanding
to
 build thermal electric power generation plants in Pakistan. The total
cost
 of the plants was $3,500 million of which $1,400 million was the
component
 of corruption. Equity involved was $700 million with an annual rate of
 return of 85 per cent. The International Finance Corporation, Private
Sector
 Energy Development Fund, of which the contributors are the US,
Japanese,
 French and Italian export credit agencies, supported some of these
projects.

 The part played by industrially and financially developed nations and
the
 Brettonwoods institutions in bringing about the current unfortunate
 political and economic situation is huge. The conditions of structural
 adjustment and other "facilities" imposed by the IMF and the World
Bank
 constitute powerful mechanisms of transfer of wealth from the poor to
rich
 countries. Acceptances of the gospel of the supremacy of market forces
and
 of the agreements under the banner of the World Trade Organization,
have
 resulted in massive transfers of wealth. According to one newspaper
report,
 the US Consul-General on Karachi informed a gathering that Pakistani
 citizens had accumulated $ 100 billion in the United States.

 Consider the case of Mexico. Naom Chomsky writes: "In the past decade
of
 economic reforms, the number of people living in extreme poverty in
rural
 areas increased by almost a third. Half of the total population lacks
 resources to meet basic needs, a dramatic increase since 1980.
Following
 International Monetary Fund (IMF)-World Bank prescriptions,
agricultural
 production was shifted to export and animal feeds, benefiting
 agribusinesses, foreign consumers and affluent sectors in Mexico while
 malnutrition became a major health problem, agricultural employment
 declined, productive lands were abandoned, and Mexico began massive
imports
 of food. Real wages in manufacturing fell sharply. Labour's share in
gross
 domestic product, which had risen until the mid-1970s, has since
declined by
 well over a third. These are standard concomitant of neoliberal
reforms. IMF
 studies show 'a strong and consistent pattern of reduction of labour
under
 the impact of its stabilization programmes' in Latin America,
economist
 Manuel Pastor observes."

 Post-cold war Russia made its currency convertible, sold off public
assets
 in a "big bang" privatization with catastrophic results, Bob Borosage
 recently wrote in the Los Angeles Times (Dawn, Jan 25). A great nation
has
 been reduced to barter. Life expectancy has plummeted, plagues,
poverty and
 suicides have soared. Writing in The New York Times (Nov 11, 1999)
 Blagovesta Doncheva says:

 "The IMF and the World Bank are successfully devouring Bulgarian
industry.
 They have insisted on privatization of Bulgaria's plants and
factories. In
 many cases, the Bulgarian government which diligently follows the
IMF's
 advice sold these factories to powerful foreign corporations. And
these
 corporations often liquidated the businesses (a new way to fight the
 competition!).

 "What is the result? Hordes of unemployed workers, beggars in the
streets,
 old people digging in rubbish containers for some rag or mouldy piece
of
 bread."

 The formula of cutting state assistance to industry in the interest of
the
 progress of economies of Third World countries is as false as that of
 deregulation and globalization. There is no country in the world,
including
 Britain, the United States and Japan, which has become a developed
country
 without radically violating the doctrine of free market that is being
 espoused today. England's as well as New England's textile industry
had
 developed by imposing harsh tariffs on imports, in the former's case
on
 Indian textiles.

 India produced as much iron as all of Europe in the late 18th century
of
 British engineers were studying more advanced Indian steel
manufacturing
 techniques to close "the technological gap." Before the middle of the
19th
 century, Britain was a protectionist country. By then its
protectionist
 policies had destroyed India's steel and textile industry. Only when
it had
 emerged as the leading industrial nation, it turned to liberal
 internationalism. Even then the British Indian government made sure
that 40
 per cent of British textiles went to India. The United States kept
British
 steel out of its market to develop its own steel industry.

 It is no secret that even today the leading aircraft manufacturers in
the US
 and Europe survive on account of large-scale subsidies received from
their
 respective governments. It is the same with high-tech industries of
 communications and computers. Today, at a single university in a
southern
 state in America there are several scores of professors in the field
of
 bio-technology who do no teaching at all but are engaged in research
 sponsored by the federal government.

 In his book, referred to earlier, Chomsky quotes a report that a large
part
 of Pentagon's budget is devoted to keeping Middle East oil prices
within a
 range that the United States and its energy companies consider
appropriate.
 Pentagon's expenditure amounts to 30 per cent of the market price of
oil.
 Direct governmental participation was largely responsible for Japan's
 industrialization before and after World War II. The phenomenal
progress of
 China in industrial field is wholly due to the guidance, assistance
and
 regulation by the state.

 The sooner Pakistan revises its policies about the role of the state
sector
 in the national economy and about protecting its industry, trade and
 agriculture, the better it would be for the country.






--------------------------------------------------------------------------
This is the National Debate on System Reform.       debate@indiapolicy.org
Rules, Procedures, Archives:            http://www.indiapolicy.org/debate/
-------------------------------------------------------------------------