Saturday, April 18, 2009

** Neo-nationalism

Neo-nationalism: The last stage of globalisation?
By R. Balashankar - Organiser
April 19, 2009

China cannot stop swearing by Communism though it has adopted western capitalism in its entirety. Similarly, the G-20 proclaimed that globalisation is still the most dominant economic idea though countries are increasingly turning protectionist and state ownership, in factors of production, has never been so critical as it is today. The synchronised macroeconomic stimulus package repeated over the last few months have not stopped the world from falling deeper into recession.

Socialism for the rich brought about by the zealots of globalisation is under attack with jobless rates in developed countries being pushed to double digit. So what has happened to capitalism and what is going to be the fate of globalisation?

Ten days before the world leaders assembled to rescue capitalism, the US administration insisted on a change of guard in the bankrupt Detroit automobile industry as a precondition for the bailout package. Similar was the fate of American International Group (AIG), when its executives were forced to pay up 90 per cent of the $165 million in bonuses, as tax after the finance company was helped survive on tax-payers’ money.

This is the unit whose manipulations came perilously close to bringing the world financial system to its knees. What has not yet been adequately addressed is the sea-change in social attitudes towards amassing wealth by a few for a few and its impact on politics in the coming years. The parties in India are becoming competitively populist in their election manifesto. The votaries of third generation reform and neo-liberalism have been silenced by the parties for fear of public wrath.

Indian politicians are turning pro-poor though a cursory glance at the declaration of assets at the time of filing of nominations show that Indian politicians have become filthy rich during the period of globalisation. Only that this is the season of “free lunch”, subsidy buttered with offers of free rice, electricity and loan.

Poverty has again become fashionable in India’s political discourse. Globalisation has not been an unmixed blessing. It increased poverty while it created millions of neo-rich politicians and business class.

The G-20 heads of state meet last week in London was the second major global effort in the last six months after the September 2008 meltdown. Globalisation in its present format is a tool to perpetuate Western, especially American hegemony.

The G-20 summit did not give any hope to the developing countries that this format will change to their advantage. Apart from the plan to restructure the IMF there was not a single positive suggestion to liberalise the construct of world economic order. The rules are framed in such a way as to exploit the market and resources of the world to the economic and strategic interest of the developed countries. Our leaders, plead ceaselessly for better deal for the developing countries and reform in the structure of IMF and World Bank.

In the nineties the nationalist forces in the country opposed the WTO. We had serious doubts about the IMF, and globalisation regulations which systematically corroded the country’s economic sovereignty. The critique on capitalism is not to discourage private enterprise. Indian economic thinking has traditionally encouraged free trade and individual enterprises. Private property was at the core of our economic philosophy. The sentiments in support of the creation of a developed egalitarian society is not to suggest Socialism as a viable model.

Our economic agenda has to be uncompromisingly nation-centric and that is the value every great nation tries to promote even as it tries to cloak its real interest in the jargon of globalisation. The great recession has offset the sheen of globalisation as envisaged by the Washington Consensus which emerged out of the ashes of the Cold War and the fall of Communism. India has immensely gained as a result of the economic liberalisation and we are today the second fastest-growing economy in the world. But is this growth sustainable? Is the model of globalisation the panacea for our problems of underdevelopment and poverty? The big growth stories of the services and IT sector would suggest that globalisation has indeed changed the way India thinks and lives. We are adopting a new idiom, a new lifestyle, a new dress code and a new culture which are essentially western. We have a world view which is essentially money centric and we have replaced humanism with wealth creation. Profit justified the concept of gambling and gambling, greed and extravaganza replaced traditional business based on ethical regulations, manufacturing, agriculture and investment on value-added products.

One of the celebrated books on globalisation, The World Is Flat, by Thomas L. Friedman vividly describes the impact of globalisation on a typical Indian company office. “…you see that all the computers are running Microsoft Windows. The chips are designed by Intel. The phones are from Lucent. The air-conditioning is by Carrier, and even the bottled water is by Coke. In addition, 90 per cent of the shares in 24/7(Call Centers) are owned by US investors.

This explains why, although the United States has lost some service jobs to India in recent years, total exports from America-based companies—merchandise and services—to India have grown from $2.5 billion in 1990 to $5 billion in 2003.

So even with the outsourcing of some service jobs from the United States to India, India’s growing economy is creating a demand for many more American goods and services.” (Page 29). (Import from US to India by 2006-07 increased substantially to $ 12.6 billion.)

That is not the entire story. The jobs being outsourced are mostly such no American is willing to do or they consider them below their dignity and low paying. Indians are paid one-fifth of the salary that an American will get because India is poor and the unemployment high with people willing to do any job for a smaller pay. This way, American companies save hugely on their labour bill.

For call centres immediately after recruitment the Indians are sent to an “accent neutralisation class” to make them speak like Americans. Their lifestyle and dress code undergo similar changes. See how globalisation is changing India. Indian units of US companies file thousands of patent applications on indigenous products they develop and market as theirs. The standards are set by them.

There are reasons to believe that the present crisis in the financial market of western economy is a great opportunity for the developing world, particularly India.

Now we have the leisure to think afresh on the direction of our economic growth. The world order seems distinctly moving towards multi-polarity. This possibility was discounted for long. The wave of protectionism, the antithesis of globalisation, has become a core philosophy with the West.

As a result, US which was the main destination of international migration has begun to repel migration. Reports talk of at least six million job losses in that country in the last four months. India will soon elect its next government.

The UPA government has unfortunately created a clientele mindset in the Indian establishment, vis-à-vis the US. The Foreign Secretary Shiv Shankar Menon during his recent visit to the US was so beholden to the big power that he justified not taking up the issue of denying Indians HI-B visa with the US authorities.

His plea was that it was a “sovereign function” of the US. After the mega bailout to stimulate its economy, the US does not want its own money leaking to other economies. So the government is enforcing “Buy American” clauses and restrictions on job outsourcing on companies availing the bailout benefits.

The US administration, recently cleared a $2 billion sale of maritime jets to the Indian Navy—something that was needed to keep the troubled airplane giant Boeing’s books looking good. It is not only the Indian money, market and services that America needs. American transnational companies like Boeing, General Electric, McDonnell-Douglas and General Dynamics will soon need to renew Indian contracts. Indian government has levers to apply on all these deals.

But it will need political will. And India has to apply them because globalisation is not a one-way street.

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