Globalization: A Neocolonial Dream

Gurukul Theological College and Research Institute, Chennai,

Globalization: A Neocolonial Dream (Working paper . Dr. T. Jacob Thomas 1.8..2003).
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Globalization is a violent system, imposed and maintained through use of violence -Vandana Shiva.

The International Monetary Fund defines globalization as "a historical process" involving "the increasing integration of economies around the world, particularly through trade and financial flows" ("Globalization: Threat or Opportunity?" IMF, January 2002). The very word "integration" is derived from "integer", meaning one, complete, or whole. Integration is the act of combining into one whole. It follows that in order to be competitive the productive plant of each country would be torn out of their national context (dis-integrated), in order to be re-integrated into the new whole, the globalized economy. The emergence of World Trade Organization is just a beginning of convergence of global regulatory mechanism of newer genre. There has been multilateral agreements earlier also like on environment and labour. What differentiates the WTO and new genre of multilateral institutions is their formidable capability to influence trade of a particular country; their verdicts could scare away the investors and the global financial institutions from a particular country at a lightening speed. The boundaries between domestic matters and global affairs became increasingly blurred. Whereas the impact of General Agreement on Tariffs and Trade (GATT)- the predecessor of WTO, has been confined to international trade, the impact of WTO agreements is of pervasive all the factors of trade - domestic, international, regional, as well as global.

In practice, this has meant that the governments of the advanced capitalist countries, along with the I.M.F., the World Bank, and the W.T.O., have increasingly sought to force other nations to adopt market economies, privatize public companies and resources, abandon labor and environmental regulations, reduce social services, and embrace "free trade" and the free movement of transnational capital. As William Pfaff points out ("The West's Globalization Drive is Proving a Massive Failure," International Herald Tribune, Sept. 29, 2000), globalization is "the aggressive program for the imposition of Western norms of national economic management, economic deregulation and market opening, and facilitating takeovers of indigenous industries and agriculture by multinational companies." I.M.F. officials argue, "Globalization offers extensive opportunities for truly worldwide development." From their perspective, the increasing global integration of national economies holds great promise because "Markets promote efficiency through competition and the division of labor...." However, the I.M.F. itself concedes, "Markets do not necessarily ensure that the benefits of increased efficiency are shared by all."


John Cavanagh provides a much more critical perspective on globalization. For him and the other authors of a report by the Alternatives Committee of the International Forum on Globalization ("A Better World is Possible: Alternatives to Economic Globalization," Spring 2002), "corporate-led globalization" and the "unrestricted movement of capital" generates enormous profits for transnational corporations but produces significant economic, social, and political harms for the majority of nations and peoples. This report finds that global well-being is threatened by the conversion of national economies to export-oriented production, the increasing concentration of corporate wealth, and the decreasing regulation of corporate behavior. The report also strongly criticizes the "undermining" of national social and environmental programs, the "privatization and commodification" of public services, the erosion of "traditional powers and policies of democratic nation-states and local communities," the "unrestricted exploitation of the planet's resources," the promotion of "unbridled consumerism," and "global cultural homogenization."


Another economist, Mark Weisbrot, co-director of the Center for Economic and Policy Research, challenges the claim that globalization has produced economic progress for most countries. Drawing on extensive research that he and colleagues at the C.E.P.R. have done, Weisbrot points out, that the "past twenty years have been an abject failure for most countries." ("The Mirage of Progress," The American Prospect, Jan. 1, 2002). As Weisbrot and his colleagues document, the overwhelming majority of countries have actually experienced significant declines in economic growth rates, increased child mortality, and reduced progress in life expectancy as well as public spending on education (Mark Weisbrot, et al., "The Scorecard on Globalization, 1980-2000: Twenty Years of Diminished Progress," July 11, 2001). In addition, as Cavanagh and his coauthors note, "The undermining of small-scale, diversified, self-reliant, community-based agricultural systems, and their replacement by corporate-run, export-oriented monocultures" is "a major contributing factor to global environmental devastation."

World Bank and Associates in India : some examples of exploitation
India joined the World Bank in 1944 and is the Bank's largest borrower: more than US$47 billion as of June 2000 in market-based loans. India began massive borrowing from the World Bank in 1991 and was forced to accept conditions that included cuts in social spending, privatization of natural resources and agriculture, and free trade to allow multinational corporations to compete against local businesses. The World Bank has funded US$96.8 million in shrimp farming in India. Over 80,000 hectares of land have been converted to shrimp farming. It was initially claimed that shrimp culture creates employment. However, less than 10 people were required to work one-hectare and it was mostly children who were hired as ‘feed boys’ One estimate in the late 1990s showed that while annual revenue through shrimp exports in Tamil Nadu was US$868 million, but, the economic loss in terms of lost livelihood in the traditional activities of fishing and farming, as well as environmental destruction, was more than US$1.38 billion Large-scale shrimp farming uses a wide variety of pesticides, many with links to cancer and genetic damage. Orissa was the first state in India to privatize water, power, and agricultural sectors after a World Bank loan of USUS$350 million in 1996. Fewer than 20% of people living in rural Orissa have electricity access since rates have gone up by 500% after privatization. The development of coal mining industries has had the most significant impact. Greenhouse gas emissions skyrocket as Orissa's coal-fired power plants will be emitting 164 million tons of carbon dioxide equivalent annually by the year 2005. Active resettlement programs displace many people without being given comparable land or even fair compensation. Dead rivers carry toxic effluent and coal ash through villages where people still rely on the blackened water for drinking, bathing and irrigation. Water tables have dried up due to mining and industrial pollutants have contaminated groundwater. Cancer, bronchitis, and other lung and skin diseases are soaring. In 1995, scientists found an astonishing 67% of men and 64% of women are suffering from fluorosis, a crippling skeletal disease caused by the inhalation of fluoride fumes and hydrofluoric acid.
Bhopal Gas massacre and the Union Carbide. On the midnight of 2-3 December 1984, over 40 tons of deadly methyl isocyanate, hydrogen cyanide and other gases leaked from a hazardously designed pesticide factory in Bhopal owned by US based multinational Union Carbide Corporation. Over 500,000 men, women and children were exposed to the poison clouds and at least six thousand people died within the first week of the disaster. The current death toll is well over 16,000. Hundreds of thousands of survivors continue to suffer from multi-systemic injuries. Union Carbide has impeded the search for specific lines of treatment for the survivors' illnesses due to withholding of medical information. It has not taken any responsibility for the incident and avoiding Indian court proceedings.
DeBeers. India is the world's biggest diamond and gemstone cutting center, polishing 70% of the global diamond yield and providing 17% of India's export earnings. The major supplier of these diamonds is the Central Selling Organisation (CSO), which is controlled by DeBeers. De Beers is the biggest player in the world diamond trade, controlling the sale of 70% of the world's diamonds. The daily pay for polishing the top part of a diamond is 2 rupees, less than 8 US cents, in 1992. This is below the Indian income tax level. Most of the cutters are not protected by India's Factory Act, which applies only to workplaces employing more than 9 workers. In order to avoid regulations such as minimum wage, owners register every pair of ghantis (a cutting table with three or four workers) as a separate workplace.
Champions of Globalization: Indian Elite
Every successive administration in the last decade has eventually succumbed to the pressures of globalization. It suggests that regardless of how different political formations package their policies in advance of the elections, there is a powerful and very vocal lobby for globalization in India. This is because for some sections of Indian society and the Indian diaspora, globalization has come as something of a bonanza. NRIs look forward to new business opportunities in a globalized India. English-language (or even local language) media outlets who expect globalization to increase advertizing revenues have also been eager supporters of globalization. Globalization has been offering a huge increase in salaries of senior managers, accountants, lawyers and public-relations personnel working for MNCs or their local competitors. For the IT-literate, job opportunities have been plentiful, and there are also opportunities to live and earn abroad. For the English-speaking upper middle-class, this has come as a boon. With greater access to disposable income, the seduction of consumerism becomes hard to resist, and the demand for unrestricted globalization inevitably follows the attraction for new and ever more advanced consumer goods. This new and more prosperous class of Indian consumers associates India's progress with the availability of the latest automobile models and consumer goods. The local availability of imported European cosmetics and fashions, imported drinks and confectioneries - these have all become important to those who have sufficient disposable income to purchase such items.
Globalization has other champions too. Importers have a strong financial interest in a globalized economy. But so do exporters dependent on imported parts and machinery. Industrialists with interests in ports, shipping, international warehousing and other aspects of international trade and commerce may also see globalization as beneficial to their sectors of the economy. Indian industrialists who have so far failed to invest in research and development and are losing the battle for market share are also becoming amenable to globalization in the fond hope of partnering with an MNC that will enable them to stabilize or expand their sinking business ventures.
Globalization and Technology Transfers

If integration is the hall mark of globalization, it has its own defining technologies: computerization, miniaturisation, digitalization, internet….and so on. Recent innovations in science and technology have provided us with a "new set of tools" which greatly increase productivity and efficiency in all areas. Technology has changed the rules of competition, rendering many traditional business strategies and processes obsolete. The change in technology is transforming products, services and markets as well as customers and competition. Advocates of Globalization argue that globalization brings in new technology. But today this has proved to be a dishonest claim. For instance, Coca-Cola and Pepsi were welcomed into the country even though they offered little in terms of new technology. Cosmetic manufacturers and manufacturers of designer label clothes have also brought in little new technology of any consequence. The same can be said of advertising companies and manufacturers of consumer non-durable goods like soap, detergent, toothpaste, cereals etc. And although there has been significant investment in the manufacture of automobiles and consumer goods, the capital equipment and the assembly lines for their production is imported. Little of the design and development work takes place in India. So far, globalization in India has not been tantamount to an all-around technological upgradation of Indian design and manufacturing. All the technology that is developed is owned and marketed by the parent company, and other than the slightly higher than average salaries that accrue to a small minority of Indians working in the sector, few benefits accrue to India as a nation. What is worse is that these companies are provided all manner of perks and privileges to exploit India's intellectual capital. They are given tax breaks and tax write-offs. They are given preferential treatment in the allocation of scarce resources like land, and round-the-clock electricity supply.
In a July 20 Times of India report titled 'IT expert warns against digital divide in country' the author wrote: A leading information technology (IT) expert has cautioned against a "digital divide" in the country and creation of disparities between the IT haves and have-nots. The report quoted M. Anandakrishnan (vice-chairman of the information technology task force of the Tamil Nadu government and the vice-chairman of the Tamil Nadu state council for higher education) as saying: "You cannot have a high-tech facility and have 50,000 people within a few kilometres who don't have any access to computers. Availability of computers in every village did not mean accessibility and accessibility does not mean assimilation. Unless there is 'localisation of content' this technology could not be used by 97 per cent of the population." The article goes on to question the euphoria surrounding the growth of the IT sector and again quotes M. Anandkrishnan: "We speak of 57 per cent growth of the software sector and 100 per cent growth of the hardware sector. We must take into consideration that the figures include hardware and equipment imports. We are talking of someone else's products. We are still dependent on imports, and even now we have to use servers abroad to get to the Net".

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Advocates of globalization have often made the claim that globalization rather than destroy Indian industry would instead accelerate the growth of new industry and cause India's economy to grow faster. But a detailed analysis of Foreign Direct Investment (FDI) in the last few years indicates that a sizeable portion of this investment has not gone into the creation of new productive capacities. Much of the investment has simply gone into into takeovers of existing Indian enterprises or towards speculative investments in the Indian stock market. Moreover, other than India's "hot" IT companies and select MNCs - the vast majority of Indian stocks have not benefited from such highly volatile FDI flows. Transnational corporations, which control more than 33 per cent of the world's productive assets account for only 5 per cent of the world's direct employment! And although the total as¬sets of the world's 100 largest corporations in¬creased by 288 per cent between 1990 and 1997, the number of people these corporations em¬ployed grew by less than 9 per cent during the same period of tremendous growth. One can well imagine the position now in a period of slow-down or recession
MNCs and 'transparency' and 'ethical practices'
There are numerous instances where multinationals have not only displayed a lack of ethics and 'transparency' but have actually broken the law. On October 2, 1998 Sujay Mehdudia in in his report in the Hindu titled: Large-scale tax evasion by MNCs unearthed. wrote: "Income-Tax officials have alleged that these companies evade taxes with impunity as the tax laws of the country are 'inadequate and ineffective' to deal with such cases." He wrote of multinational giants flouting tax laws knowing very well that they could not be arrested or criminally prosecuted against under the Indian legal system and could get away by paying the tax dues when caught. The article quoted a high-ranking tax officer as saying: "Had the violations taken place in some other country, not only would criminal proceedings have been launched but the people responsible for it would have been put behind bars." The author concluded his article with the statement: " A more recent Hindustan Times report (May 12, 2000) was more specific - it began with the headline: Rs 2100 crore tax evasion by MNCs. Minister of State for Finance V Dhananjaya Kumar in a written reply to a question posed in the Lok Sabha had provided data that indicated that MNCs had evaded Rs 1433.89 crores on income tax, Rs 143.80 crore on central excise duty as well as Rs 535.05 crore on account of import duty payable during last three years. Sony was identified as the biggest evader, and charged with evading over 450 crores. SEDCO Forex International Drilling Co, Swiss-Swedish major Asia Brown Baveri, Hyundai Motors, Johnson & Johnson, Siemens, LG, Hawlet Packard and Philips were others implicated in cheating on import duties. Several MNCs had not paid enough central excise duties - including stock market darlings like Hindustan Lever, Procter and Gamble and Nestle. EID Parry, Gillette, Pepsi, Bayer, Novaritis and Carrier Aircon were also named as violators. Asia Satellite Telecom, Sabre Inc, Lucent Technologies, Nokia, Caribjet inc and Allied Signal group had been cited for serious income tax violations. Amadeus Marketing, American Airlines, British Airways, Pan Amsat, Motorola, Ashurst Morris Crisp, Reuters and ABN Amro were also in the list of companies to have evaded income tax.
Squeezing the Public Sector, Reducing Social Spending
There is also an assertion that globalization allows India to allocate scarce capital more efficiently because the Indian government could concentrate on areas that need special attention. But few seem to note that in this decade of globalization, the government has been steadily reducing its ability to fund vital social needs or infra structural needs. Numerous tax breaks have been given to MNCs to set up manufacturing in India. States have competed with each other in offering concessions to MNCs. Maharashtra has huge concessions to Skoda for its automobile plant near Aurangabad, Tamil Nadu offered special incentives to GM to set up it's plant near Chennai. Karnataka and Andhra Pradesh have been competing to attract IT businesses in their state. Even the Central Government has joined in the act. Another condition that international lenders often impose on developing nations is that they must stop supporting their public sector enterprises and allow private and external participation in key sectors of the economy. They also call for a reduction in social spending. These conditions are usually disguised as a matter of improved "efficiency" and controlling "unnecessary budget deficits". This means that budgetary support for investment in key areas such as mining, power generation, railways and telecommunication has to be drastically curtailed. The "Import Lobby" is usually unperturbed by these cuts because they view these cuts as an opportunity to increase their imports. But the consequences for the rest of the population as a whole can be quite disastrous.
With the government refusing to invest in these critical areas, crippling shortages develop in vital aspects of the infrastructure. International companies insist on all manner of tax breaks like extended tax holidays, subsidized land, and "counter-guarantees" before they invest. Even though such concessions go against the spirit of "free market economics" that the international lending agencies trumpet, these concessions are treated as inevitable. Costs escalate in spite of all these hidden concessions. For instance, all the power projects that are demanding counter guarantees will generate electricity at almost double the cost of a BHEL built plant in spite of various concessions that should have reduced the cost-basis of these projects. Private industry, particularly MNCs tend to focus on the major metropolitan areas, concentrating growth in some areas and completely ignoring others. Take the boom in car manufacturing - (something encouraged by all the political parties): it is concentrated in just a few major metropolitan areas. The demand is also restricted to a very narrow elite. (And so far, it has also caused a huge drain in the nation's foreign exchange reserves.) Consider also how the Software Industry is booming in a few towns, while the overwhelming majority of Indians have never seen a computer.
Fighting against Goliath
On January 11, 2000, the KRRS,(The Karnataka State Farmer's Movement) sent an open letter to Mr. Mike Moore, the President of the WTO, quoting a placard that was carried by a protestor on the streets of Seattle which read: "Wicked Trade Organisation." The letter accused the WTO for plundering the biological wealth and traditional knowledge from India. The letter said that the WTO is trying to recolonise the developing world under the garb of free trade. Its patent laws have been designed to facilitate biopiracy from the biodiversity rich countries. Almost 90 per cent of India's estimated 45,000 plant species and 81,000 animal species are already stored illegally in the United States. The struggle against the construction of mega-dams on the River Narmada in India is symbolic of a global struggle for social and environmental justice. The Narmada Valley Development Project (NVDP) has been conceived without adequate participation from the people who are going to be affected. The construction and planning of many dams of the NVDP has disrupted the lives of millions of people without just and adequate compensation.

The "Battle of Seattle" in late 1999 marked a new stage in the growing revolt against globalization. Prior to that there were mass demonstrations against globalization in May 1998, when more than seventy thousand people protested against the Group of Eight meeting in Birmingham, England. In June 1999, protests were held in several cities in Europe and North America to coincide with the G8 Economic Summit in Cologne, Germany. Tens of thousands of demonstrators took to the streets, most notably in London... In India one group directly connected to the international anti-globalization movement is the KRRS, the Karnataka State Farmer's Movement, representing thousands of peasant farmers in the southern state of Karnataka. In recent years, the KRRS has physically dismantled -- with iron bars -- a Cargill seed unit, trashed another office of the same multinational agribusiness, burned Monsanto's field trials of biotech cotton, and trashed a Kentucky Fried Chicken outlet in Bangalore. And so, on November 30, while a state of emergency was declared in Seattle, and various militarized police forces proceeded to brutalize thousands of anti-WTO demonstrators, the KRRS organized its own demonstration in Bangalore. Several thousand farmers, along with their allies, issued a "Quit India" notice to multinational food and biotech conglomerate, Monsanto also on November 30, activists of the NBA organized a 1000-strong non-violent procession in the Narmada Valley "protesting against the anti-human agreements and institutions that are pushing India and the rest of the world into the destructive process of capitalist globalisation." One week earlier, 300 adivasis (indigenous peoples) from the state of Madhya Pradesh stormed the World Bank offices in Delhi.
The KRRS has also been a major component of the People's Global Action against "Free" Trade (PGA) movement, which unites peoples' movements on five continents (including the Zapatistas of southern Mexico and the Landless Peasants' Movement (MST) of Brazil).
The ideology of Social Capital. In his works, Bowling Alone (2000 )and Making Democracy Work (1993) Robert Putnam has turned the useful social relational concept of social capital by James Coleman and Pierre Bourdieu into an economic theory. Putnam argued for technocratic solutions to world's illness rejecting controversial politics John Harris (Depoliticizing Development: The World Bank and Social Capital. (2001) And Naomi Klein (Fences and Windows: Dispatches from the Frontlines of the Globalization Debate,2002) have criticized this ideology as a rhetoric ploy by which the World Bank seeks to present the process of development as purely technocratic processes that have no political content. Richard Davis, Research/Executive Officer Joint Methodist-Presbyterian Public Questions Committee, in his article, "Social Capital: A Critique" (http://www.soicialissues.godzone.net.nz, retrieved on 30.8.03) accuses the idea of social capital to be overly capitalistic. According to authors Bob Edwards and Michael W. Foley,( " Social Capital And Civil Society Beyond Putnam," 1998.), such concepts are liable to be misused and counterproductive if appropriated without giving attention to the circumstances in which forms of capital are created and deployed. The social capital theory of Putnam and endorsed by the End of History fame Francis Fukuyama work with the assumption that a single, global variable ("associational membership") can be taken to predict meaningful differences in social, cultural or human capital. Richard Davis cites what happened in New Zealand when the New Right Government came to power in 1990. It has undertaken legal measures to reduce membership of the trade union and the influence of unions generally. They used the concept of social capital as a means to justify cuts in government spending in the areas of labor benefits, health, education and welfare. Government's involvement in favor of the poor is a barrier to social capital. They demonize the political process and deny the community. Roger Kerr of the Business Roundtable in a speech given in August 1996 praised Robert Putnam's theory of social capital and compared it to David Green's notion of "civil society". In his book From Welfare State to Civil Society Green argues for a society in which the government will withdraw from welfare and voluntary associations will take its place by assisting the less fortunate, thus placing the poor at the mercy of the rich. The distorted vision of "social capital", destroys communities with suppressing unions, increasing inequality, reducing social spending and pitting different sectors against each other. Margaret Thatcher's saying characterizes this vision:" There is no such thing as society. There are individual men and women, and there are families." (Richard Davis "Social Capital: A Critique" . Similar policies are followed by the BJP government in India, which wants to create the rule of the religious aristocracy of Brahminism by Saffronization and control wealth by privatization by effectively shutting out the poor and the minorities. They find great support from the World Bank and its globalization associates.