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By Aseem Shrivastava Let us first clarify what globalisation is not. There are many who like to argue with the hindsight of experience that there is nothing new about the globalisation happening now, especially in India, whose culture and civilisation since ancient times have been shaped by a myriad international influences and invasions. India has in turn been a great influence on others: during the course of history it has affected the cultures of China, Japan, South-East Asia, the Islamic world, Africa and Europe. From Buddhism and philosophy to the fundamentals of arithmetic and algebra, India can take legitimate credit for its contributions to human culture. Such a view is profoundly mistaken, not because India has not been a crossroads for human cultures. It has certainly been that and more. What is dangerously wrong about such a view is that it fails to understand the unique nature and significance of the profound economic, ecological, military, ideological and ultimately political and cultural changes that the recent - corporate - incarnation of globalisation has let loose, not merely on the subcontinent since its hurried, unplanned inception in 1991, but on the planet as a whole, putting in serious doubt the viability of human civilisation itself. For our purposes here it is important to understand the character of recent globalisation as an economic and financial phenomenon, originating in the West, embraced by the Indian ruling elites, and with far-reaching consequences for Indian society as much as for those elsewhere. The importance of financial globalisation is usually missed by people who focus too much on the globalisation of culture. Today the volume of international financial flows is of much greater magnitude than the volume of international trade and the global GDP itself. Globalisation cannot be understood without keeping in focus the fact that the impetus for it has come from the Anglo-American world. During what is known to economists as 'the first wave of globalisation' (1870-1914), led by the British Empire, virtually the whole world was inducted into extensive international trading relationships. The First World War put an abrupt end to that. Importantly, finance was not a developed segment of the economy. So globalisation was restricted largely (though not exclusively) to trade and (some) direct (physical) investment by Britain and other European powers. We may note in passing that the international labour market was far freer then than it is today, with immigration to the US loosened by the requirements of the labour market. At that time many countries did not even require passport checks and visas at their entry points. Reckoned in terms of human mobility, the world was much more free than it is today. Importantly, even in the West a quarter of a century ago (1980), no one had heard of globalisation. When this writer grew up in North India in the 1970s and 1980s, the word was certainly unheard of. The term came into use in the West very slowly during the 1980s and truly gained importance only in the 1990s after the fall of the Berlin Wall. Capitalism was declared to have been the winner of the Cold War over communism with which it was believed by many to have been in competition for three-quarters of a century. Now it was sold by the great powers -- and India was not one of them -- to the world as the superior economic system, by sheer virtue of having outlived its rival. And by the same token, the whole world was asked to adopt it. It was the United States, under George Bush Sr, that imposed globalisation upon the world - as part of "the new world order" after the First Gulf War in 1991. This was necessitated by the requirements of further growth for American capitalism, in particular of its transnational corporations (henceforth, TNCs). This is a fact of extreme importance, with profound consequences for the future of the world, other than helping us understand somewhat accurately what is going on today. Globalisation has far less to do with free trade (which rarely exists in practice, never mind the nomenclature) than with the extension and consolidation of markets within the broad canvas of American empire - whatever the cost to the world and to ordinary Americans may be. It would not have happened without corporations. So, even using the term corporate globalisation is actually unnecessary. Globalisation throughout the modern era - whether you consider what economists call the first period of globalisation (1870-1914) or the present one (since the early-1980s) - has been led and sponsored by the ruling imperial power (Britain in the 19th century, the US today). Neither the cotton farmers of Maharashtra, nor the fishermen off the Philippines or the Malabar coast, or for that matter any social group from a labouring class anywhere were consulted before policies of globalisation were imposed on their lives and livelihoods. They were not asking to be globalised. The corporations wished to have unrestricted access - to markets, natural resources, cheap labour and investment opportunities. As we shall see, capitalism can only survive by expanding, by running harder and harder to stay in the same place. Expansion presumes many, many things, but above all it requires natural resources, human labour, markets for final products, outlets for investment (in both physical and financial capital) and growing command of productive assets (for instance, enterprises hitherto in the public sector). By the 1980s, after two centuries of growth in the Western world, capitalism encountered saturated markets in Europe, the US and Japan. The 1970s had been a troubled decade for the capitalist system, as it struggled with oil crises and stagflation. The Bretton Woods system - which was the cornerstone of international finance - broke down in 1971 when the US refused to convert dollars held by foreigners into gold. (From then on, the dollar became the default reserve currency of the world.) There were two great oil price hikes - in 1973 and 1979 - whereby the OPEC cartel was practically able to hold Western economies to ransom. 1979-82 was the deepest recession in the West since the 1930s. The 1980s were a period of recovery from the deep recession, until the savings and loans crisis in the US precipitated the 1990 recession. When Soviet communism ended in 1989, TNCs began looking first towards Russia, Eastern Europe and South-East Asia. Later they began looking towards China and India for further expansion, after the 1997 financial crisis in South-East Asia and the 1998 crisis in Russia dashed many hopes and destroyed much wealth. China, to be sure, had already begun to attract investment after its reforms from TNCs by the mid-1980s. In the 1990s, the enormous populations, first of China, and later of India, began to be held up in Western corporate boardrooms as the "markets of the future". IMF (International Monetary Fund) and World Bank economists popularised the use of the expression 'emerging markets' to denote those parts of the world which were potentially good spots for investment and which were increasingly being drawn into the sphere of Western capital. Large middle- and low-income countries - Brazil, Russia, India, Mexico, China (BRIMC) - were classified as 'emerging markets'. (East and South-East Asia had already 'emerged' - and crashed in 1997). One feature of these markets that was deemed uniquely different from the 'developed markets' of the Western world and Japan was the enormous significance of politics in shaping the climate for foreign investment. Thus, globalisation refers to the growing integration of markets (not necessarily 'free') in different parts of the world. It also means the establishment of international production and supply chains across the globe. A product today involves inputs and processes that span oceans and continents. Rubber could be collected in Malaysia, processed in Thailand, treated in China, vulcanised in South Korea and made into car tyres in California. However, the economic integration of the globe has proceeded most rapidly in financial markets. Production, trade and direct investment have been slower to get 'globalised', for obvious reasons: money can be transferred at the click of a mouse. Goods and machinery take the long route by sea. The fact that finance is so mobile today is crucial for the stability of the global capitalist system, making it immensely more vulnerable to breakdowns. Even a casual look at the business pages today suggests that seasoned observers and financial regulators (including those at the IMF) are deeply anxious about the astronomically large, growing and increasingly autonomous, deregulated global financial markets - typified by the hedge fund phenomenon since the beginning of the century. More and more publicly quoted companies are selling out to private equity, making supervision more difficult. Gambling over everything -- from currencies, companies and real estate to natural disasters and pension funds -- has become the norm in global financial markets, turning capitalism into what traditional economic wisdom used to fear: a casino. It also means that funds for investment in physical capital are less readily available, since the returns are low and slow by comparison. Before we discuss some key features of Indian globalisation and discover the challenges and dangers staring the country in the face, it is worth spending some time trying to understand the basics of capitalism, the root of modern globalisation. InfoChange News & Features, January 2007
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