The Challenges of Globalisation
By Nik Nazmi Nik Ahmad, Political Education Unit, Policy Research Institute

"Die Globalisierung . global networking that has welded together previously disparate and isolated communities on this planet into mutual dependence and unity of 'one world'," thus went Emanuel Richter's definition of globalisation.

These days, globalisation is the 'in' word. Free market and laissez-faire advocates proclaim the benefits that the world will get from this incredible phenomenon. Politicians from the developed world are urging the developing countries to open up - while the politicians of the developing world warn on the excesses and shortcomings of the process, pointing out the fact that the global playing field is not a leveled one. We are being told by anti globalisation and left-wing activists that the word differs from imperialism only by spelling. They are and mean the same thing.

True enough, globalisation is not a recent phenomenon, and we in Asia especially are no strangers to it. "The current discourse on globalisation is all too often predicated upon the assumption that it is a phenomenon totally without precedent," said Anwar Ibrahim in a conference on globalisation back in 1997. "Many see it as a tidal wave that will smash the barriers separating the human community into nations, races and tribes. True
enough, certain aspects of the present wave of globalization - its extent, reach and intensity, for instance - have no parallel in history. But if globalization is essentially an encounter, or encounters, of cultures, we in Southeast Asia have been globalising for centuries. And we have no hang-ups about coming into contact with traditions and beliefs that are different from ours."

But today's globalisation takes a different form than what it used to. Governments are being left more powerless - yet they cannot afford not to take part in the process. The information revolution with the advent of the Internet is making the process take place faster than ever. Resisting globalisation - in its numerous forms, is a daunting task in all spheres of life - economic, social and politics.

European welfare states and the protectionism of the third world became unpopular when right-wing free-market advocates Margaret Thatcher and Ronald Reagan became leaders of Britain and The US respectively. Then, the Soviet bloc collapsed, leaving a unipolar world led by America. Thus, with the exception of a few isolated economies, global capitalism spread like wild fire throughout the world. Even China, ruled by the Communist party had decided in the late 70's to leave behind Maoist policies in favour for Deng Xiaoping's 'market socialism' - in other words, an increasingly capitalist economy but under the authoritarian regime of the Communist party.

The Uruguay round of the General Agreement of Tariffs and Trade gave way for the establishment of a new capitalist institution - the World Trade Organisation (WTO). Together with the International Monetary Fund (IMF), they are now pushing for more nations to be part of the globalisation experience.

Globalisation heralds a new era where information, capital and labour can move across borders in lightning speed in the new shrinking world. Attracting foreign capital becomes an easier task for a globalised country. For example, the open-economy policy by the Finnish government in Helsinki has allowed the city to be a world leader in the information and communications technology industry. The success achieved by Nokia best illustrates the result - within a short span of time, it is now the major firm in the mobile phone market, taking significant market share from its rivals. The so-called Greenspan miracle, which sustained an incredible economic growth in the US for an unprecedented period was actually only a policy of allowing more of the American economy to experience the benefits of globalisation - an economy fuelled by foreign economic activities, foreign workers and a free flow of information.

Compare this with Japan, where previously the politicians still subscribed to Keynesian policies of increasing government spending to boost the ailing economy, but to this day, have failed. This is despite that the country commands the world's largest savings in the private sector - a whopping US $13 trillion. Quite a number of countries in the world are still stuck with the 19th century nation-state mentality that still fear any move to be more integrated to the global economy.

As national and regional economies become more integrated, the burgeoning volume of trade will result in increasing employment opportunities and more goods and services available for the consumers - thus raising the standard of living. In search for lower costs, multinationals will slowly leave behind manufacturing operations in expensive first world countries to operate in the developing world, thus contributing to economic growth in the developing world.

The collapse of barriers would also bring in competition to local companies. The onslaught of bigger, powerful and better-funded foreign firms would force local firms to be more efficient, and slash their costs in order to compete. This would benefit the consumers, as Malaysians will benefit when the ASEAN Free Trade Area becomes a reality and foreign cars would no longer carry a 300 % import duty on their price tag. However, many small and medium sized firms and industries will be wiped away if they are unable to compete - resulting in loss of jobs and opportunities.

There are other shortcomings in the pursuit to be part of the global economy. There is the globalisation hypocrisy of the developed world - forcing the third world countries to open their markets while at the same time pursuing protectionist policies in their own countries. The IMF admits that developed countries have the highest trade barriers in manufactured goods, while Bill Clinton in his address to the University of Warwick said, "If wealthiest countries ended our agricultural subsidies, leveling the playing field for the world's farmers, that alone could increase the income of developing countries by US $ 20 billion a year."

An increasing number of developing countries - including Malaysia, have abandoned agriculture in pursuit of industrialization, partly because the inability to break into the West's agricultural market. Thus, as more of the people leave their farms, developing countries have to import their food. Our food import bill stands around RM 10 billion a year. The inability for countries in Africa to buy food for their people have led to severe famine which crippled their economies and societies.

Third world governments are forced to swallow the bitter pill of liberalising their economies, hoping that the long-term benefits of the process would be a reality. In the meantime, their countries have to endure what international capitalist institutions call 'structural adjustments'; which for the masses mean suffering social services such as healthcare and education, spiraling unemployment and the removal of subsidies from goods and fuel - such as those experienced in Indonesia. Politicians from the developed world on the other hand, are not willing to take the political cost of liberalising.

In giving out loans to member countries, the World Bank forces them to subscribe to harsh and strict rules to swiftly sell-off nationalised industries, while the IMF makes it difficult for nations to regulate against attack from currency speculators. As the Asian tiger economies of the 90's became much more a part of the globalised economic order; we witnessed the crushing economic downturn of 1997 when currency speculation crippled the bubbling economy and investors acting under the 'herd behaviour' - leaving Asian markets by the droves and shutting them down.

Globalisation means that there is a greater economic interdependence in the world. The 'Great Depression' of 1929 was the first economic recession to reach global proportions, meaning that the Wall Street crash in New York caused millions of indentured Chinese and Indian labourers in Malayan mines and plantations to be deported back to their home countries. Presently, the American economic slowdown is causing a looming recession in the Asia Pacific region - including Malaysia, whatever certain parties try to claim. Economic developments in one country, particularly the major centers of demand and supply would affect other countries much more than previously. "You couldn't even build a strategy for Japan without recourse to its implications in the rest of Asia and also the world," said renowned globalisation advocate Kenichi Ohmae.


Nevertheless, other factors also contributed to the Asian economic crisis. While Asian leaders liberalised their economies - they also allowed corruption, cronyism and nepotism to prosper. Corporate governance and transparency got negative ratings as the line between politics and economics became blurred. Global economic standards that should have accompanied the process of liberalisation were not observed.

In pursuit of getting more foreign direct investments, third world countries throughout the world stripped most of their law to make it more attractive for multinationals to operate within their borders. This competitive effort resulted in huge losses for the environment and labour of those countries.

Foreign firms exploit millions of workers in underdeveloped parts of the world. Western, Japanese and even Asian multinationals, including Malaysian, build factories and employ the people for grossly cheap wages - to enable them lower costs and be more competitive to win greater market share. The labourers work long hours in poor conditions, and lives have been lost in the process.

Abbey Steele from Free the Slaves, New York spoke in the recent Malacca International Youth Dialogue about the existence of 27 million 'new slaves' in the world. People are forced to work through violence and threats to work long hours at 'slave' wages.

Multinational corporations are getting more powerful. Being able to operate without limit across the globe means more profits for corporations, and more money will equate in greater political clout. The combined sales of US car manufacturers Ford and General Motors are greater than the combined GDP of Sub-Saharan Africa. The six largest Japanese trading companies are almost equal financially to all the countries in Latin America combined. In recent years, we see a trend of mega mergers and takeovers to enable multinational corporations to perform better in the competitive globalised economy, such as the Renault takeover of Nissan, Star Alliance airlines and BP-Amoco merger.

In other words, multinational corporations are now like countries in their own right. Corporate capitalism is becoming more similar to Soviet communism than we realise. Ray Kroc, the entrepreneur who launched McDonalds into a major fast food chain goes into record as saying, "The organisation cannot trust the individual. The individual must trust the organisation." Like Lenin, many corporate figures are great admirers of Henry Ford's assembly line, and have adopted the method while stripping the workers from their skills and confine them to repetitive tasks because human beings are after all, the most inefficient component of mass production.

Chee Yoke Ling of the Third World Network recently spoke about how 39 multi and transnational pharmaceutical companies challenged the sovereignty of the South African government earlier this year by challenging a government law legislated to enable the state to produce, license and import cheaper versions of brand name drugs to treat HIV. The law was deemed appropriate for a country where 1 out of 9 South Africans is a carrier of the virus, many of who could not afford brand name drugs. The companies complain about how the legislation would affect their profits, despite the fact that only 1% of their profits come from Africa. "These companies have made medicines so expensive that lives become secondary to profits," said Chee.

The Westphalian concept of sovereignty, entrenched since the 17th century, is meeting its end. The contemporary state finds itself in a situation where it is impossible to control global companies, global ecological and environmental problems as well as global stock and bond trading. Loyalty, formerly exalted on the nation, now takes supraterritorial forms, and international organisations mushrooms throughout the world. Focus on defense and military expenditure will give way to more spending on infrastructure and education in national budgets. Militarisation will put the world at risk of war - and that will only harm a nation's economy that is dependent on the rest of the world.

Nevertheless, at the same time, extreme forms of tribalism and nationalism experience a revival among disenfranchised communities resulting from the global phenomenon. Thus we see following the demise of communism and a world bound by 'the New World Order', states like Yugoslavia suffering dissolution and ethnic strife, the formation of extreme right groups such as Pauline Hanson's One Nation and the recent ethnic clashes in Britain.

Xenophobia is also in the rise. In our own country, the Barisan Nasional government frequently stirs up xenophobic sentiments of 'foreign intervention' and opposition 'ejen asing' for the sake of their own survival. Authoritarian regimes are finding themselves surrounded by calls for a return of power to the masses and a global tide demanding for democracy. Globalisation demands for more openness in political governance. This is because anti-libertarian regimes cannot sustain a nation's globalised economy for long as it requires for a free flow of information not available in countries ruled by dictatorships. Michel Camdessus remarked, "It will be important to increase transparency and the free flow of information on which the service and financial sectors-and, indeed, the modern economy-depend."

We will see how long can the authoritarian regimes which are part of the globalised world economy can last. Both Dengist China and Kuan Yew's Singapore - two economies increasingly globalising yet experiencing little democracy, will face stiff tests in the years to come if they do not grant more freedom and liberty to their people.

While democracy will be promoted, but viewed from another perspective, globalisation and democracy are at odds with one another. Democratic elections are determined by local masses, who are mostly out of touch from the rest of the world, which determines the economy of the country. Then we have the American President, who is not determined by the citizens of the world but only by Americans. While this may seem appropriate, in today's world, America determines so much of the economies of other nations. Even the American president exalts more influence on the Japanese economy compared to the Japanese Prime Minister.

As global forces rather than politicians and governments increasingly determine local affairs, people become more disillusioned with democracy. Throughout the world, there is a general trend of falling numbers of voters. In Japan, it had previously reached 40% - a significant low, which only
needs 21% of the voters to be the majority.

It does not help of course that numerous supranational organisations and institutions are not democratic themselves. The existence of permanent veto powers in the UN Security Council, and quota-based votes in the IMF and World Bank undermines the very concepts of equality and democracy, while reinforcing its image of being neo-imperialism. "Globalisation," said Martin Khor in 1995, "is what we in the Third World have for several centuries called colonization."

The Internet is an empowering tool in the process of globalisation. While information now moves freely across borders, it also mobilises labour and capital at an incredible pace. Certain jobs and tasks can now be outsourced to cheaper employees in developing countries. Nevertheless, the Internet along with satellite television also provides room for threats against local ideals, values and cultures - the McDonaldsation of the world. English is fast becoming the dominant language of the Web. The 'digital divide' also limits the benefits of the net across the world, as only a tiny fraction of the world's population have access and ability to use the Internet.

It is not to say that we should isolate ourselves from the ongoing and continuing process, but those who are driving the phenomenon should accommodate more of the views and idealism of the common men and women to ensure that the ascendancy of anti-globalisation protests, in the words of C Fred Bergsten, will not continue. The longer the mass-withdrawal of consent takes place, is a sign that many are not enjoying the hypothetical benefits of globalisation. Globalisationists should review the raison d'etre of the process, which is to benefit everyone in all aspects of life, and not only allow the accumulation of wealth among the rich and powerful. The globalisation of trade should result in the globalisation of wealth and the spread of global democracy, as well as environmental and labour standards.

Nik Nazmi Ahmad, 19 is attached to the Political Education Unit, Institute for Policy Research (IKD) Malaysia