Globalisation and its discontents

WORLD MONEY/ Is there anything beyond selfishness in the advocacy of globalisation?

This column is not about Joseph Stiglitz's book but about the World Social Forum (WSF) and a couple of other conferences held in Mumbai during the last fortnight.

Stiglitz was an honoured guest and speaker at the WSF, but he is not ideologically in the anti-globalisation camp, whatever his criticisms of the International Monetary Fund (IMF).

To quote Stiglitz, "I believe that globalisation "" the removal of barriers to free trade and the closer integration of national economies "" can be a force for good and that it has the potential to enrich everyone in the world, particularly the poor."

Indeed, most poor countries that have advanced to the middle income/rich country status "" Korea, Taiwan, Thailand, Malaysia, Hong Kong and Singapore "" have done so by embracing globalisation enthusiastically.

Mainland China, nominally a communist country, has also put its faith in global markets. Stiglitz also argued in a recent interview that, "much of the problems of developing countries lie within themselves". In other words, before blaming globalisation, multinational companies and others for our ills, we need to look within.

The WSF conference attracted 100,000 delegates from all over the world. If the conference was part-carnival, it also boasted of a thousand-odd seminars, meetings and talk-fests, on topics ranging from social issues to multinationals, the IMF, the World Trade Organisation (WTO) and so on.

While conference participants were vehement in their criticism of their pet phobias, a student volunteer commented: "I think capitalism has plus points too, which they refuse to talk about. And the speeches are very vague, there are still no alternatives or concrete solutions given."

Is there a legitimate place in the removal of poverty for capitalism and its handmaiden, globalisation? Is there anything beyond selfishness in the advocacy of globalisation?

On first principles, removal of poverty implies increase in consumption "" food, clothing, better shelter and so on "" and this can come about only if the output of goods and services goes up.

This, in turn, requires innovation and initiative, which, for all its idealism, socialism has not been very successful in promoting. Indeed, most socialist economies have witnessed enormous centralisation of power, sapped local initiative and bred parasitic bureaucracies.

When the system guarantees "to each according to his need", a person tends to overlook the corollary: "from each according to his abilities".

At the current stage of evolution of the species, man's exertion of efforts has generally been related to his personal gain. This is selfish, but so, unfortunately, is human nature.

The second point that is often forgotten by critics of globalisation is that, historically, the output of goods and services has gone up only through an increase in production for exchange, rather than for consumption by the producer himself.

One can see this irreversible change from self-sufficient village communities of the medieval era to today's globalised economy making use of specialisation and comparative advantage.

Mahatma Gandhi's ideal economy did consist of self-sufficient villages. (But even self-sufficient villages depend on exchange, between the cobbler and the agriculturist, for example. The purist could, of course, decide to go barefoot!) The alternative to production for exchange is a deliberate curtailing of wants, a philosophically-attractive but unrealistic objective. Even the poor would really like to consume more.

They do worship Laxmi, the goddess of wealth, as fervently as any card-carrying capitalist.

No matter how romantic the ideal of a simple, self-sufficient village lifestyle may be, not many would opt for a lifetime of spinning yarn on a takli, if an alternative is available.

This apart, we should also not overlook that villages suffer from many social evils like caste consciousness, superstition, parochial attitudes, oppression of women and so on, on a far more blatant and virulent scale than cities.

Speakers at the conference also railed against the pricing of power and water based on costs of providing these services.

The reality, at least in India, is that much of the subsidisation of services such as water, power, cooking gas and education is gobbled up by the relatively better-off "" and the cost is paid, in the ultimate analysis, by an even larger number of people who do not have any access to such basic services. In most instances, the "haves" are subsidised at the cost of the "have-nots", and cheap or free goods and services are too often wasted.

But coming back to globalisation, I recently came across an interesting example. It seems that palm oil refineries in India went out of business after the introduction of an Indo-Nepal free-trade agreement because Nepalese duty on imported crude palm oil was lower.

Clearly, this minor piece of globalisation hurt our refineries. But should we not also be thinking of the larger number of consumers of refined palm oil who got it cheaper, thanks to the low duties in Nepal?

If we are seriously against globalisation, we should be condemning Indian restaurants abroad that outnumber McDonald's; Indian movies being shown all over the world from Morocco to Tokyo and Seoul; Indian multinationals like Ranbaxy and Asian Paints and the jobs India has plundered from the US through its IT and IT-enabled services industry.

And we should applaud the US government for banning outsourcing of government jobs. Otherwise, we are not really against globalisation but merely mercantilist!

On a personal note, if, as a supporter of globalisation, I still oppose capital account convertibility, it is because I believe that the consequential volatility in exchange rates impedes globalisation by adding to the risks of cross-border trade and investment.

E-mail: avrco@vsnl.com