Globalisation is arguably the most evocative word in the contemporary political economy discourse. Recent events connected to the economic turmoil following the global financial crisis have only intensified the debate. While the anti-globalisation tribe, whose numbers are swelling by the day, see the crisis as a vindication of long-held beliefs, those devoted to globalisation (and the numbers are still impressive) ascribe it to inadequate globalisation! The debate can only be expected to intensify in the days to come, as globalisation proceeds inexorably and, in the process, alters traditional social structures, the way business is done, and the way people perceive themselves.
Tracking Globalisation is a timely contribution to the raging debate on the issue, particularly for the nuance it provides to various arguments. The book is an outcome of seminars delivered by “seven great economists of our time”, as the preface rightly says, and focuses on some of the more important issues that frame the contemporary globalisation debate. While the book has an India focus, the conceptual framework for each essay is universal, which makes it of persuasive value anywhere.
“Development, freedom and justice” are indeed the fundamental issues with which the discourse on globalisation has come to be associated. Has globalisation undermined development by excluding more people than expected? Are outcomes from globalisation fundamentally unjust? Is the world less free because of a more constricted set of choices owing to globalisation? Is governance both at the level of the state and the firm irrevocably impacted by globalisation?
Consider development. As Edmund Phelps states in his essay, there is nothing like underdevelopment in neo-classical theory. Countries were simply (or simplistically) classified according to the level of capital they accumulated. Issues of distribution emerged as an afterthought in the late 1960s, continuing to engage attention for a decade, only to be relegated intellectually under the Reagan-Thatcher dispensation that held centre stage for much of the 1980s. This is exactly what Skidelsky underlies in his delineation of the power of ideas: the research agenda is often set by those in power. Has the globalisation debate then brought issues of inequality and underdevelopment back to the forefront? If the number of articles one sees in academic journals and the popular media is the yardstick, the answer is in the affirmative.
Edmund Phelps and Amartya Sen situate their own perspectives of development mainly in terms of greater inclusion and freedom of opportunity, respectively. Phelps’ main concern that forms the central thesis of his book Rewarding Work (1997) is on formulating policy to divvy up the reward structure in the formal economy, thereby preventing people from being pushed to the underground. It is simply not in society’s interest to allow an underclass to develop. This is economic pragmatism, pure and simple. The revival of research interest in the fundamental question of inequality is welcome, because inequality as a social concern never really went away. Indeed, countries in east and south-east Asia, poster countries for rapid economic growth, have actually seen a sharp increase in income disparity. Amartya Sen’s work over three decades does much to debunk the increasingly popular but facile argument that democracy is a hindrance to growth! While an authoritarian structure may have helped economic mobilisation in the “catch up” phase in countries’ development, it can be a serious impediment to the free flow of ideas that drive innovation. The inability of countries in east Asia to replicate their success in manufacturing in innovation owes much to a political system designed to suppress discourse.
In including Jagdish Bhagwati, arguably the most passionate defender of globalisation, and Joseph Stiglitz, its uncompromising critic, Tracking Globalisation virtually explores the entire spectrum of the argument. The concerns Stiglitz raises – increase in poverty particularly in Africa, the increase in unsustainable sovereign debt all over the world, increasingly unfavourable terms of trade in favour of developed countries, increasingly iniquitous outcomes from global trade negotiations and global financial instability – have understandably no ready solutions available. While Bhagwati persists in his defence of free trade, he is not unmindful of the consequences of letting free-trade agreements in their present form take shape. Indeed, a lot of genuine giving by developed countries is needed if multilateral trade agreements stand any chance of success.
Don’t bet on that happening anytime soon!
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How is India faring under globalisation? On all three parameters – development, freedom and justice – the evidence is mixed. Though the economic pie has certainly grown larger over the past two decades, India’s record on spreading the benefits is not as stellar. The data on the number of people “lifted” out of poverty are still contingent upon methodology and, in any case, are less impressive than the official data suggest. Opportunities have grown in general but access to opportunities is still restricted. To Meghnad Desai and Bhagwati, this is not overly worrisome, simply because the alternative, autarky, is a lot worse!
The book’s biggest takeaway is the continuing need for social policy where the government has a role to play. The limitations of the market to allocate efficiently and the perils of excessive deregulation have been starkly exposed by events over the past three decades. Very few, in the opinion of this reviewer, are as qualified as the contributors to address the vexing question of globalisation and its consequences. For a non-technical exposition of the fundamental issues, Tracking Globalisation is as good as it gets.
TRACKING GLOBALISATION
Debates on Development, Freedom and Justice
J S Sodhi (ed)
Penguin-Viking; pages: 167