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Why Globalization Failed to Deliver? |
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Globalization has now started exposing social disparities between those with education, skills, and mobility to flourish in a free world market and those without. Although globalization is promoted as the inevitable path all societies must travel on, it is a process that has exacerbated social and economic polarization in the world, perpetuating the tremendous schism that exists in the human community. The Extremes of affluence, over-consumption and over-production in the rich countries are paralleled by a concentration of poverty, scarcity, and exploitation in the poorer countries. The losers are now increasingly anxious about their living standards and their precarious place in an integrated world economy. The result is severe tension between the market and broad sectors of society, with governments caught in the middle. The following offers only a glimpse of what is unfolding worldwide, and is expected to perpetuate:
Can globalization be made to work for the poor? Can globalization, as presently implemented, be made to work at all? These are very fundamental and frequently asked questions in the globalization debate world over. In view of what presented above, the answer is frankly “no”. The claim that "globalization has caused extensive poverty" seems to be quite reasonable since the structural and policy changes associated with the globalization of the last two decades are responsible for an economic slowdown of most of the developing countries. Among economists, the most basic measure of how well an economy is working is growth - that is, the growth of income or GDP per person. The last 20 years of "rapid globalization" have seen a drastic slowdown in this fundamental measure of economic performance. The rate of growth of per capita income for all low and middle income countries combined, over the last 20 years is less than half of its previous rate (1960-80). In Latin America, for instance, per capita income grew by 75 percent from 1960-80, however, from 1980-2000, it grew by about 7 percent. These numbers go a long way towards explaining why populist revolts are sweeping across South America – in Argentina, Brazil, Peru, Paraguay, Bolivia, Venezuela, and elsewhere. In Africa, which grew by a modest but still significant 36 percent from 1960-80, the last two decades have seen an unprecedented decline in per capita income, by about 15 percent. The situation is not different in Asia. The China, which has been the fastest growing country in the world history, has actually improved its growth. But on the whole, developing countries even including China, with its 1.3 billion people, weighted by its population – along with everyone else – the record of the last two decades are terrible. This is the worst economic failure since the Great Depression. It reflects very poorly on the economics profession that the vast majority of economists, with a few notable exceptions such as Nobel prize-winner Joseph Stiglitz, have chosen to ignore this failure. Rather than hiding these facts for political and ideological reasons - or fear of lending support to the much maligned "anti- globalization" movement - economists should be trying to help figure out what has gone wrong.
My analysis is that the globalization, a worldwide process bringing people closer and closer, is inevitable and it has already gone too far in the age of information technology (IT). In my opinion, the globalization itself has never been as bad as we have made it due to our egotistical motives. So, there is a need to understand realities and evil forces associated with the globalization and try to distinguish “ethical globalization” and “commercial globalization”. May be we never bothered so far to differentiate between the two but these are there and that is the reason we come across two groups of people, the pro-globalization and anti-globalization ones. The pro-globalization people in fact desire for an ethical globalization while anti-globalization groups are against the commercial globalization. Let us see difference between the two.
The ethical globalization is a natural and ongoing phenomenon as old as the humans history is. We all know that humans have been shifting from stone/cave age to the social life and now we are in the modern age. What is it the “modern age”? In fact every era in the past was the modern age of that time being different and better than the older one. This phenomenon is called modernization. As a matter of fact, humans psychologically like reform in their life and that is why modernization has been and is on increase. This is, thus, an on-going process and will continue. However, prior to the last five decades, the governance, jobs, business and peoples’ attitudes were generally welfare oriented and that is why the globalization process was ethical. Things then started to deteriorate leading to the commercial globalization where we are now at its peak. The peoples’ attitudes generally have turned profit oriented and everybody is in rush to earn as much as possible in a time plus inputs as less as possible. The natural globalization process has been turned into commercial one artificially where customary and moral values, peoples’ rights, environment, health; all these values have become meaningless. Let me show you what happened during last few decades which led the world to this course.
Following the disastrous Great Depression of the 1930s and the wreckage of the 2nd World War, the developed countries led by the USA got united to create a new international economy and as a result, International Monitoring Fund (IMF) and World Bank (WB) were created by the Bretton Woods Agreement of July 1944 in New Hampshire, USA. In other words a vast development enterprise was born. It was made up of government donor agencies, private foundations, international development banks, universities and research institutes, along with ministries of finance, industry and development. Amid this constellation, one institution was central – The International Bank of Reconstruction and Development, otherwise called as the World Bank. The WB was created to coordinate the awesome job of economic reconstruction in the post war Europe. The mandate of the WB, however, quickly expanded to finding capital in developed nations to invest in the infrastructure of developing countries. Loans to developing countries were made from 1948 and by then, its focus had fully shifted to development in the third world. Meanwhile, due to political pressures from Washington, the WB and IMF became de facto subordinated to US Policy and as a result, the USA alone contained 60 percent of all the capital stock of all the advanced capitalist countries during 1950. Now with the expanded mandate, IMF and WB lend exclusively to developing countries and emerging economies. These loans, in fact, are linked to conditions that increasingly impinge on the domestic policies of the state. The result is that lending countries enjoy increased decision-making power and use it to expand the conditions they impose on borrowing countries, while the later experience the conditions as extremely imposed and therefore outside their own control. This eventually, benefit the lending countries and when the risks associated with the advice are mostly carried out by the people of the borrowing countries.
Similarly, during 1947 the General Agreement on Tariffs and Trade - GATT (changed to World Trade Organization in 1995) was created as a framework for reducing trade barriers by periodic bargaining. The WTO’s main objective is to the establishment of rules for members’ trade policy which helps international trade to expand with a view raising living standards. However, the world has witnessed that it has been twisted, over-time, in a way that those who maneuvered the rules took benefit from it and the rich nations, so far, by virtue of their better bargaining position, were able to do so. Consequently, trade has become advantage for industrialized countries to further their economies while developing countries never got promised benefits and are still struggling for a better and competent continued existence.
Having shared the historical background, it is obvious that the commercial globalization gradually replaced the ethical globalization that resulted into avaricious attitudes, increased exploitations, widened income differences of countries and among masses within the countries. According to an estimate, merely 20 percent people (majority from developed world) are enjoying 80 percent resources leaving barely 20 percent resources for rest of the 80 percent world masses. Thus, apart from attractive theories and principles, the way globalization is artificially being induced; it is dangerous and is obviously not acceptable, especially to the developing countries. Developed world has attained some better degree of development and profit-making-globalization might be a best and ideal option for them. However, as countries (developed Vs developing & least developed) have different socio-economic realities and unlike development levels, a one-size-fits-all approach would not only not work but also, if enforced, potentially do more harm than good.
The commercial globalization, as a matter of fact, has failed to deliver and if it continues, the sovereignty of developing states will stay at stake. Transnational Corporations (TNCs), on behalf and with the support of few industrialized countries, are feared to rule the world rendering national governments helpless. It is, thus, high time to reassess the ongoing globalization process to give way to the rule based but ethical globalization. Though the commercial globalization has gone too far, an-other world is possible if 80 percent deprived people around the globe get sensitized, mobilized and united in their demand to have ethical globalization instead. We have just witnessed globalization in its two forms. One is welfare oriented and pro-people but gone, while; the conventional one is pro-profit and self-oriented. We have anyhow to go for one. A positive attitude should be to make the existing things better in favor of our society rather than just ignoring. At this juncture, one may argue we should demand “ethical globalization” where welfare should in all events be priority that can only be brought in through gradually reforming the conventional globalization process. Already, poverty only exists because some people have chosen to take more than their share of resources and power, depriving other individuals of their rights and necessities. If we could return to being a global community where people were more important than profits, there would be no damage by globalization, as any development would be seen as for the good of all. Fortunately there are some who do think this way, but a huge change in thinking is required for attitudes to really change. Ends |
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