Globalization True, and False

Any discussion on free trade must include a discussion of free immigration, for it is people that produce the goods that are to be traded. If the producers are not free to move, then trade itself is not free. As the writer Balakrishnan argues, “immigration cannot be ignored in any global compact on economics.” Balakrishnan is, however, aware what free immigration means to developed countries: the loss of cheap labor. Free immigration would raise the wage rate and thus lower the rate of profit. True “three-dimensional globalization” is “cross-border traffic in goods, capital and people.” While one can see why developed countries may resist aspects of globalization, developing countries may also resist. Still, globalization may be the only solution to what Balakrishnan calls India’s “democratic deficit. - YaleGlobal

Globalization True, and False

Pulapre Balakrishnan
Monday, August 20, 2001

TODAY WHEN you say `globalisation' you may be understood as having in mind either the historical trend or a contemporary project, and this is no academic distinction. Of these, the trend is easy to comprehend. It is a progressive integration of the peoples of the world, the outcome of an expanding human consciousness and an unforgiving technological progress unmindful of cultural difference. The project itself is more insidious and therefore difficult to comprehend for the uninitiated. It is to integrate into the American sphere of influence economies of the world hitherto closed to Western commercial enterprise. This is then presented to the developing economies as TINA, or that there is no alternative.

While the trend in globalisation may have quickened in the last decade of the 20th Century, partly propelled by the implosion of the former Soviet Union, the movement of people, ideas and goods across cultural borders is hardly recent. India, partly due to its antiquity and partly due to its traditional openness as a society, is unique in the world in having experienced this so extensively. It is common to hear the lament that her system of enumeration was spirited away to Europe by a bunch of traders whose national origins lent it the title `Arabic numerals'. Or, that a quintessentially Indian design came to be named after the Scottish town of Paisley. However, it is mostly forgotten that over at least one millennium before all this the ideas of Gautama Buddha had spread east from India to emerge as one of world's great world views. Despite having been dubbed religion by China's communists, it raised its proud head in their own territory as egalitarianism.

But enough about the trend, and on to how globalisation can also be seen as a project of our times. From the end of the 20th Century on, the United States Government has driven a Western agenda to restructure the world economic order to further American corporate interests. Here globalisation is a stratagem, defined by Washington - the de facto capital of the world - as the freedom of the U.S. to sell goods and services and to move capital across physical sites and financial centres across the globe. This agenda has been orchestrated principally through the multilateral World Trade Organisation allegedly based on the principle of `one member one vote' but where its traditional political power gives the U.S. unparalleled power, as can be seen from China having to settle differences directly with it before being admitted. A curious feature of this American view of the world is that it is silent on human beings. Labour, which produces capital, does not appear to figure in this grand discourse on markets and competition, or even of `American values' which had made an appearance in the context of, of all situations, the downing of the U.S. spy plane in China some months ago. Then, in a breathtakingly Orwellian speech, Mr. George W. Bush explained that it was in keeping with American values that China's markets must be open to American goods. This interesting argument is apparently oblivious of the principle of reciprocity, for America's markets are not open to Chinese workers.

Now on to three central inter-related issues. The traditional case for free trade is made on the grounds that it increases economic welfare. It is easy to see, for instance, that you can trade coconuts with which you may be blessed in abundance for oranges with which you may not be. Thus trade is metaphorically a way of transforming a nation's endowment of goods, leading to a wider consumption basket, thus increasing welfare. But then not all of a nation's citizens are producers. For labour then, with labour power as its only endowment, immigration out of the employment- scarce economy is a means of similarly transforming its natural endowment into goods via the sale of its labour power on the world market. Now, there can be no argument whatsoever for not including unhindered labour mobility as part of trade liberalisation. Thus, immigration cannot be ignored in any global compact on economics. All this is independent of the Western demand for the free movement of capital. Once this is acceded to even in principle, to keep immigration out of the discussion reduces it to a sham. It goes against the principle of competition, and introduces an asymmetry into the rules of the game as they govern the range of choice for labour and capital in the global economy. Clamping down on labour mobility is then akin to a non-tariff barrier to trade, a restrictive practice.

Capital mobility linked with restriction on the movement of labour is directly beneficial to American capital and universal capital convertibility, urged on the developing countries by the IMF and required under certain provisions of the WTO, directly serves the U.S. economy. When such capital is transferred to produce cars in Mexico City or Chennai it has access to a large reserve army of labour which it is able to tap for a pittance. Immigration could change all this for it would raise the wage rate in the basin of emigration, thus lowering the rate of profit. Equally, the U.S. stands to gain from capital convertibility in the rest of the world. It has long run an external payments deficit which has been financed by capital inflows from the rest of the world. But a puzzling preference for the currency of the world's largest debtor can only be capitalised upon through free convertibility of all national currencies into dollars. Indians cannot buy U.S. Government bonds with their wretched rupees, can they now? Any theoretical respectability for capital convertibility has been effectively demolished by Jagdish Bhagwati, the doyen among trade theorists, who has astutely pointed out that it principally favours the Treasury-Wall-Street complex of the U.S. Unable to fathom its true value, some of India's economists have rushed to say economic development is being held back by the lack of capital convertibility.

What Washington means by `globalisation' is a world safe for U.S. and Allied capital. This, in all its humped-up versions, is a fake. Three-dimensional globalisation entails cross-border traffic in goods, capital and people. While it would hardly be wise to remain outside the WTO, the Government of India has a duty to argue in all international fora that what is being proffered there as globalisation is not the real McCoy.

There are very likely many in India who would oppose globalisation even if it allows Indian labour to migrate. Such reasoning is of course defeatist and harmful. We see from the history of Kerala that it has gained much from the migration - nationally and internationally - of its workers whose remittances, and transferred attitudes, have undoubtedly played a part in its much-vaunted development experience which has taken place amidst an abject failure to generate employment. Thus blind opposition to globalisation by Kerala's political parties and their organic intellectuals is both hypocritical and ignorant. However, by far the most reactionary posture is the use of globalisation as an excuse for doing nothing about India's haemorrhaging economy. The misery of large sections of India's population is merely a reflection of a society that does not care for itself. The everyday hardships of the people, the growing environmental degradation, the rotting food-mountain amidst poverty, and the monumental waste of public resources have nothing to do with constraints placed on us by the rest of the world. On the other hand, it has entirely to do with a `democratic deficit' in the ``world's largest democracy''.

Actually, some might argue that globalisation is the only solution to India's debilitating democratic deficit. Indeed, it was this very deficit that had brought out demonstrators into the streets of Seattle and Genoa. These are not opponents of true globalisation per se, but of unrestrained corporate power abetted by democratically-elected governments whose unaccountability to the people is no longer tolerated. It requires great moral courage for those in comfortable material repose to choose to face armed police. Viewing these extraordinary scenes on television from the comfort of your living room you are held by the inescapable reach of the ancient Indian expression Vasudeiva Kudumbhakam. Sure, the world is one family. In July in distant Italy young Carlo Giuliani died from gunshots so that the people of the India can hope for a democratic future. We are all globalists now.

Copyright © 2001, The Hindu