The perils of globalization and a free market economy
The globalisation i refer to above is of the economic kind(which sometimes cannot be seperated from the socialogical meaning of the term). In Lay-man terms globalisation in the contemporary context means the emergence of a free-market economy at the global level. Before I get into the nitty gritty of it let me eloborate on a few things.
Free Market Economy: The free market economy is an ideal of doing away with all trade restrictions or tariffs between economic entities(countries). So if a rolls-royce sells for a million dollars in the US, it would cost only a nominally higher amount in india. This puts all the local industries in direct competetion with the rest of the world.
What this means is that a truly capitalist economy might emerge. Capitalism without regulation(as in a mixed economy) always tends to take the path of most profits rather than the path of the common good. This means there is no mechanism within the corporate capitalist economy that can go against the injustices corporations and economies are ready to commit in order to make an extra buck. Take for example west africa. West africa is the primary resource of the one of the most valuble raw materials in the world “chocolate” yet they live in abject poverty and most of the workers in the plantations are slave labourers mostly children.
Here we see some of the primary traits of a capitalist economy without a watchdog. The capitalist economy needs 3 things to thrive and will acheive them at any cost.
1) Raw Materials And Resources – Most of the poor or poorer nations of the world provide the raw materials and resources for the engine of the capitlaist economy.
This means that if a corporation or a country that is powerful can effect the global atmosphere in some way to increase profits or improve its strategic advantage for future profits it will.
EG: 1) The heavy military involvement of US in the political matters of all the middle eastern countries because they are rich in oil.
2) US bringing authoritarian regimes into power by supporting proxy wars all over the world to exploit the country’s resources.
2) Market For Goods – The third world also acts as a market to dump goods into and generates the bulk of profits. Corporations and countries always try to eliminate local competition by promoting free trade and biasing the country’s leadership to do so. If any country resists it could face sanctions which cannot be handled by such fragile economies so they are inevitably biased towards the powerful. In this and the above case the more powerful an economy, the better equipped it is at negotiating with external pressures.
EG:1) If indonesia tried to increase trade tariffs to be fair to the local entreprenuers, the west might increase the trade tariffs on all of indonesia’s exports thereby effectively holding the country’s GDP for a ransom.
2) If US tried to pull something similar with china(being a more powerful economy) It would be able to resist the coercion and will create a strategic lose-lose situation which will be a stale mate. This is why china and india have such bargaining power with the US.
3) Distribution of profits: The capitalist economy always tries to increase the margin of profits and the distribution of profits to make the rich richer while at the same time the growth in the profits of the working class is not proportional.
Eg:1)If nike is making profits of 5 million a year producing shoes in malasiya and finds that it can make profits of 10 million a year doing the same in india, then without loss of a beat the entire operation will be shifted. The problem that clearly emerges is that the corporation is global but the union of workers it employs is not. Hence this lends to their exploitation.
If this were a mixed economy all the above and many more traits of the capitalist economy can be discounted by strict government regulations that hinder productivity at the cost of loosing moral ground. But the absence of such regulations at a global scale means the weak are open to exploitation by the strong. As one can see every feature of the above discussion cries out imperialism, except that this is a new kind of imperialism where miltary muscle is replaced by economic strength. Even covert operations are being used by the CIA to protect their interests abroad. For the latest example look at the coup it planned to displace chavez as the president of venuzuela, who has been very vocal against globalization.
The only defense against this imperialism is to grow economically as fast and as strong as possible, while at the same time obtaining a strategic position within the world economy as an irreplacable entity. This is because a strong economy alone does not garuntee a country’s survival, It has much more to do with how well we can merge ourselves with the economy of the powerful such that any attempt at a manipulation “politcal” or otherwise would mean loss of productivity in both the long and the short term.
Globalisation is slowly but surely happening since the last 3 decades and is accelerating. The best way to be strategically placed in this movement, to protect a nation’s moral, political and economic values is to grow economically and specifically be a part of growth of other economies. Trying to make ourselves indispensible when we are intact is our main aim if we are to avoid being exploited.
PS: this is a repost from one of my other blogs.