MOUSUMI ROY

GLOBALIZATION AND CRISIS

Globalization today it is not the 'war' of 'strength' but 'economy'. The national boundary lines are disappearing; colonization of the minds is the hidden agenda, controlling the market is the goal. Can peace be empirically measured in this context? Yes. Both are, however, myopic and limited in definition when considered philosophically; that is how we as people wish to dissect it. In national context the term peace is a misnomer.

Development and growth oriented policies, building infrastructure, creation of investment friendly environment, attracting private investment domestically and through FDI, creation of job opportunities, utilizing country's vast human resources through correct skill acquiring system, improving education and healthcare system, boosting agriculture and improving storage system of farm produce, fast decision making and setting up right policies for economy, industry, R&D, defense, foreign affairs etc. - all come under good governance. If private participation is not attracted then we will go back to the era of governmental participation in all sectors. The country will not be able to achieve growth it requires to attain to aspire for global power. Hence good governance should be the prime issue. Selfishness and greed need to come down in each of us.

The world is on the brink of unsustainability and a massive collapse of modern civilization. ISIS is the harbinger of what can result if too many bad decisions are made. Only need one major environmental disaster, or financial meltdown to push the 'globalized' world over the cliff. What follows will make Nazi Germany and Imperial Japan look like a Sunday picnic.

East Asia combines all that are new and highly productive machinery produced by years of foreign investment, plus improving, rather than decaying infrastructure, plus an increasingly better educated work force, along with rising wages which are still about one eight what western wages have now fallen to. The math of profit maximization is inexorable. Only tax and regulatory policies and trade agreements written for the 99 percent rather than the 1 percent can significantly inflect them. Neither Hollande’s attacks on the social acquis nor Obama's next generation trade agreements go far enough. They will just lead to lower living standards, higher structural unemployment and greater inequalities of income and wealth in the West.

Under neoliberal globalization, artificially high consumption in the West has depended on the willingness of China and other competitive producers to hold down wages at home and recycle export surpluses as loans to Western countries. That has financed fiscal deficits and held down interest rates on everything from T-bills to credit card bills and mortgages. A shift to consumption (and higher wages) in producing countries means smaller surpluses, less available goods to recycle and higher interest rates for the West. That will force more "belt-tightening" by Western governments and households. How that belt tightening is distributed within Western countries will depend, at least in part, on their domestic political decisions.

Exploitation in any form is bad. The problem lies in defining exploitation and determining how the benefits of labor and capital are divided amongst various stakeholders. One big problem lies in determining the factor prices of labor and capital as it depends on the supply of these factors. The surplus value should also take into account the issue of productivity gain. The idea of the contribution of technology in productivity gain has been quite a recent one, initiated by Robert Solow of MIT in his Nobel winning PhD dissertation. Prior to that, technology was explained away as a parameter in the classic microeconomic production function. But now, in economic theory, this is included as an exogenous variable along with capital and labor. It would not be wrong to say that Mr. Marx was born a bit too early to perceive the impact of technology. Apart from the pure argument of economics, there are other concerns of ethics and humanity that need to be considered in dealing with the issue of exploitation.

The income disparity is a real and pervasive economic issue that is addressed by political means. There are different political philosophies that attempt to tackle with it. Of course, there are differences of opinions about their effectiveness. Bombastic words like “Humanism,” etc. are overused in India without a proper appreciation of what it really means to instill humanistic feelings among people. Soviet-style state capitalism gave rise to the development of a bureaucratic economic system replete with social imperialism. Nehruvian policy, often called socialistic (which was, in fact, far from the standard notions of socialism), engendered such state capitalism that it primarily served the interests of the rich instead of those of the common people in a chronically indirect and ineffective way.

In ordinary parlance of the Indian leftists or socialists, a capitalist is exemplified by a Tata or a Birla and more recently by the likes of Ambani and Adani. But people engaged in small enterprises are also part of the capitalist fabric. The only differences are in scale and relative political and economic power. The difference between the road side shop (run by the small businessman) and aforementioned conglomerate behemoths lies in the scale, economic- and consequent political power. When people talk about black money, they think of the havens of secret Swiss bank accounts. But anybody engaged in tax-dodging with cash payments is indeed generating black money. A teacher providing tutoring services and earning unreported cash is, in fact, part of that racket though he or she may not invoke in the minds of others the images of high living and offshore secret accounts.  They are seldom perceived to be part of the problem. That is why it is so difficult to rein in the black or underground economy – its participants are more grassroots than is often thought.

 The leftists, now in diminished numbers, do not seem to find China’s economic aggression in the subcontinent to be nearly as menacing for India as they should, or perhaps, refrain from being vocal about their concerns. The plight of small farmers in India is an old and critical issue, which needs serious attention for a stable and permanent solution.

Post-independence Nehruvian era witnessed some industrial policies in the direction of socialism. It may be said such adoption was necessary to create industrial base in the country. Licensing Raj or Permit Raj did not do any good towards growth of country's economy - hence policy of state control was probably the need of the hour during that time.

It must be remembered that trade unions are not always socialist instruments. The success of the economy under state control during these experimental times demonstrated to some inadequacy of capitalism. However trade unionism has been over stretched in India. In the end it has caused more damage to growth rather than benefiting workers or poor. It has helped trade union and political leaders. Leading examples are seen in the industries in precarious state or in erosion in eastern India where strong trade unionism has existed for decades.

Gradualist or socialist believes in achieving total or partial socialism gradually. We cannot import ideas of socialism and should not follow what socialism did in Europe or in China. Socio-economic situations are different in India. However we attempted state control policies far too long and failed to open up our economy to keep pace with global economy and be competitive.

Opening up of economy through liberalized policies though adopted late, should have been persuaded strongly and discreetly in industry segments or sector-wise. We cannot forget employment generation for our vast population; so all policies need to be adopted with employment generation in mind. In the past we have failed probably due to improper implementation and focusing on the area rather than policies themselves.

Hence, had we opened our economy or adopted liberalized policies a decade earlier, we would have increased literacy or alleviated poverty. Some segments surely brought fruits but many areas were even not brought under the purview of liberalization policies. We, therefore, need to be more pragmatic and focused on employment generation, building infrastructure, providing healthcare and education and attracting FDI in preferred segments. Only then our country can be self-sufficient with own production base to compete in the global economy.

Rising food prices worldwide is a matter of great concern and is being discussed in many international forums. As studies show, households in developing countries spend most of their income on food (nearly 70%). Rising food prices affect them much more than households in developing countries.

Studies have also shown that food price escalation is not only due to shortage but also due to poor storage, wastage, improper distribution, corruption in managing food policies. It goes without saying that famine, drought and political stability in many countries have great impact in global food price rise. Speculation is another important factor. Roles played by banks, financial institutions in speculative details and infographs are often being viewed as adverse impact on global food prices.

Global demographic pattern, urbanisation and industrialisation are playing their own role in food habits. The high usage of staple food globally is a combined effect of all these. Food import policies of developing countries together with political decisions are no doubt damaging livelihoods and employment of poor households and villagers in developing countries as local producers are deprived.

Protection of local agricultural systems to enhance rural employment should be included as a measure of framework for food security of poor and developing nations. Hence it is imperative for all countries to focus on long term plan to have stable food self-sufficiency to exploit their own natural resources.

Global poverty, death from hunger are shame for the community – there must be effective schemes and active initiatives to fight the obstacles to restore fundamentals of survival.

We have to recognize that fascism is a global problem. We have to somehow rekindle such basic human ideals as empathy and kindness. We have to think very hard how "each of us" becomes "all of us." We need to accept that society reflects all of us, and that our individual decisions to comply or to resist are critically important.

No matter where you go in the world where the 1% solution is applied, it doesn't work. MLK Jr. was assassinated only when he began the poor people's campaign and began questioning the obscene aspects of capitalism. He was called a communist, despite the fact that he never embraced communism. He only fought for economic justice, equity and fairness for the little guy.

It isn't so easy to live in and with capitalism: every wrong thing will get punished, every piece of cheating will have adverse consequences. Capitalism let markets to correct them. Socialism and communism with command and control are easy to live in and with. I wonder why still people get bored with socialism and communism after some time. Whenever markets are manipulated and economic legislation becomes too cumbersome, markets take their revenge on capitalist economies. When such things happen, people suffer and agitate for more regulation and a dose of socialism.

Capitalism BY ITS NATURE breeds slavery and sows deprivation and destruction. Mitigating it with a Socialist governmental structure/approach is a positive, but it fails to solve the problem, fails to change the nature of the beast. It's like being satisfied with fewer slaves when the only humane solution is to have no slaves.  Socialism is a step in the right direction, in my view, but the ultimate solution is to kill and bury the beast for good.

The lesson of the 20th century is that capitalism finally overcame the state in it with minimal protection of it. The meager social gains made via social democracy (not anywhere close to be true socialism) were realized under very specific conditions of capitalist development that are long gone. The few states left to "contain" capitalism have in fact been totally subsumed by it and the powerful ones are in the business of destroying weaker states. There is a need to abandon 20th century modes of binary thinking that were always shallow and inadequate anyway.

Like global warming, the progression of the fortunes of the world's richest people have increased at an exponential rate confounding those who want to believe there is some logical pattern to world economics and the wealth of individuals. That rigging of the system, and the cancer like growth of control over markets and governments alike, isn't logical, but simply unrestrained greed that has been totally overlooked.. A better system will have to emerge, if we as a society (and as humans) are to survive. Paul Klugman once remarked, "In the long-run, we are all dead."

I am all for the economic trickle-down effect, but I also feel that a humane system will give some chance of dignified survival to the very poor, since the trickle-down effect takes a few decades to reach the bottom of the pyramid. And that takes even longer to do so, when crony capitalism and political mafias syphon off many benefits in the trickle-down chain.

Capitalism or free enterprise is a system where property rights are sacred, and every transaction (to transfer property) is voluntary. Cap-and-trade declares the atmosphere a property to be acquired with the right to pollute part of it and then allows free trade of those rights. It's a good solution IF we agree CO2 is a problem.

[MOUSUMI ROY]