By: Tarun Kumar
In last five decade of twentieth century has been perhaps the most remarkable in period of human history in terms of scientific development as we have unlocked countless secrets.
In this same period saw the creation of institution of global governance: the United Nations, the International monetary fund, the world bank, and the GATT which turned into World trade organization. The soul purpose of these global institution was stated that as to make world peaceful and prosperous for all. One of the most significant commitments of last five decade of twentieth century has been to economic growth and trade expansion, and we have been spectacularly successful in accomplishing the both. Global economic output expanded from $3.8 trillion in 1950 to $18.9 trillion in 1992, nearly a fivefold increase. And to achieve that economic growth and trade expansion, these institutions played significant role by making economies borderless and turn national and sovereign economies into global economy, through globalized economic model. In which globalization is at its center and the idea of globalization is driven by the free market and open market policies. The idea of globalization was propagated by saying that globalization would be the golden age for humanity. In terms of economic growth, new opportunities, zero hunger and poverty, global interconnectedness Etc. However, a bigger question arises here that, Are the promises of globalization seen on the ground? At what cost did this economic growth and trade expansion take place? Has this economic growth and trade expansion happened fairly? Has the benefit of this economic development been equally shared with the people of the lower income group?
Other such questions have also been raised from time to time. And the policies of globalization, and the impartiality of international institutions have been questionable with time to time. It is because even in the world’s affluent countries, high levels of unemployment, falling or real wages, greater dependence on part-time jobs without benefits, weaking and shrinking of the middle class, lacking of social and financial security among large section of the society. All those questions have become relevant on the globalized economic model, free and open market economy, in the COVID-19 pandemic phase and the pandemic has made us think about what needs to be done to absorb the times of crisis. Does the global economy help or the local border economy helps in difficult times?
To address these questions firstly we need to critically analyze the concept of idea of globalization, to understand how international institutions favour corporate class of western world.
With the help of case studies, we will try to understand the impact of globalization on developing countries.
Latin America: In Latin America between 1991 and 1995 wage gaps increased for six of seven countries of Latin America. Costa Rica is the only exception is Costa Rica, where education levels are relatively high.
In Mexico, where the rural poor are concentrated in food production and, income declined between 1986 and 1996 for every decile of the income distribution except the richest, where it increased by 15 percent.
The above data clearly shows that most of the Latin American countries have lost their sovereign production rights and the livelihoods of small owners have turned to laborers for large owners. Which results into increasing inequalities in the society. And production has been monopolized by corporates, leading to consolidation of wealth, resources and assets. The monopoly and accumulation of wealth distort the levelling playing field for the new enterprise and slowly the income gaps between rich and poor become huge, and shrining of middle class. Wherever the middle start shrinking the overall health of that economy start deteriorating. Thus, unemployment rate, inflation, interest rate etc. will start skyrocketing. And the exploitation done by the corporates is bear by the poor and the remaining middle class.
Costa Rica- How global institution favour corporates and west
Before the International Monetary Fund (IMF) and the world bank restructured Costa Rica’s economic policies in the name of easing its foreign debt problems, Costa Rica was widely known as a society that was more egalitarian than its neighbors. It had a strong base of small farmers and few of large Landholding characteristic of other Latin American societies. The policies imposed by the IMF and the world bank shifted the economic incentives away from small farms producing the things that Costa Rica eat toward large estates producing for export. As a consequence, thousands of small farmers have been displaced, their lands have been consolidated into large ranches and agricultural estates producing for export, and Costa Rica’s income gap is becoming more like that of rest of Latin America. The country is now dependent on the imports to meet the basic food requirements, and the foreign debt that structural adjustment was supposed to reduce has doubled. The IMF and world bank point costa Rica as a structural adjustment success story because economic growth has increased and the century is now able to meet its growing debt service payments.
In fact, the objective of the international institution is to promote and implement policies that are in favor of the interests of Western countries and large corporates of the world. These international organizations act as a security wall for the corporate if there is any social resistance. Because in the early 20th century anti-imperialist movements have risen up and shaken up the corporate empire. So in order to make the corporate control over the world last forever, international institutional framework has been established which acts as a sec0urity wall and makes the economies borderless.
The skepticism of policies of globalization, and questions about the impartiality of international institutions have grown ever since the pandemic hit the world.
The fairness and proactiveness of all international organizations from the United Nations security council to the World Trade Organization and the World Health Organization are questionable. We are following an economic model where globalization is at core and the idea of globalization is driven by the force of market policies and imposed on the developing economies. Western countries claim globalization and market policies to be the most accurate economic model for the world trade and prosperity. Today the same western countries are taking economic steps against globalization and market policies. Like America is following the policy of American first, Britain has left the European Union and the escalating trade war in the world economy clearly shows that only the countries favoring globalization are now rejecting the economic system of globalization. However, the main reason behind the imposition of the policies of globalization on the developing countries is to run the developing economies according to the policies of free and open market so that the self-reliance of the developing countries can be ended. And by promoting consumerism, multinational companies can run the economy based on corporate interests rather than on human interests.
Western countries have linked the concept of globalization with democracy and have started pursuing the policies of globalization with democracy. This is the reason that in the last decade, the corporate world has increased its interference in the politics of the world rapidly. As a result, in most democracies of the world, the importance of money in the electoral process and the accountability of political representatives to the people was lost, and crony capitalists or their caretakers became the guardians of democracy. Due to which the social power in a democracy started to lag behind the state power. And the issues related to the public disappeared. We all know that western countries also claim themselves to be the greatest protectors of democracy. But the policies of globalization do not match with the democratic system, if seen clearly, the policies of globalization are against the democratic system. Because the foundation of democracy rests on the social system. On the other hand the globalization system is based on the policies of free and open Market. Therefore, simultaneously pursue of democracy, national self-determination, and economic globalization cannot be sustainable. When the social arrangements of democracies inevitably clash with the international demands of globalization, national priorities should take precedence. Economic and social inequality continued to grow in developing countries due to the non-matching of the policies of globalization with the social arrangement. Because social economy is important in a democratic system. In which the local economy works on a decentralized economic model between the government, corporate and society. Due to which business is also done and the possibility of accumulation of wealth and resources is minimal. Whereas the globalized economic model works on the money economy, meaning that the globalized economic model separates the society from the economy model and puts it in the bucket of the market alone. So sometimes corporate deliberately creates market for commodities. Therefore, economic boundaries must coincide with political boundaries. If not, then democracy becomes hollow façade. When economy becomes global and governments are national, then corporate and institutions functions largely beyond the reach of public accountability. Thus, in most of developing countries the rich are getting richer and the poor are getting poorer.
Moreover, Banking is also very important in the economic system of globalization. Because basically the route of investment passes through the bank.
The financial system has also changed due to globalization. And now the world’s financial markets have shifted to the one global model, and the private market for financial institutions and services continues to grow, which giving rise to a wave of privatization or mergers of national banks. Which simply means that the corporate wants to take over banking as well. Which mainly happened in developed countries. This puts the entire banking system at stake, as these private financial institutions are gaining ground parallel to the already existing nationalized financial system. E.g In US more than 500 banks merged or closed between September 1992 to September 1993.
If the private sector gets a foothold in the financial market, then it is like putting the control of the entire economy in the hands of the corporate, which certainly cannot be in the interest of the nation and the people. Because with the entry of the private sector, regulations were generally weakened, as the private sector run on profit making.(C-Counter Currents)
Author is an activist
