A famous development economist once quoted this regarding globalization :
“The Poor complain and they always do and that is just an empty Chatter ! Our System brings rewards to all , atleast to all those who matter .”
What is Globalisation? Its just a modality of International Integration . Its great to meet with people from other nations and various cultures.But whats the official version of Globalisation the one we continously hear to in the media as the panacea for development , poverty etc . This form of globalisation involves basically opening up our borders to imports from developed nations. This is not new, just the terminology and packaging differs . Thus the onslaught of Agriculture products from US-Canadian Agri-business virtually wipes out the rural agriculture industry. As markets tends to control cropping patterns the farmers depend more and more on Multi national Agri business companies for subsistence.The local food produced cannot compete with the imported food products and the peasants just start producing for exports or they become “Rational Peasants”.The process involves governments cutting subsidies to farmer this defines the anathema of a nation with 40 million hungry stomachs dumping its own produce in the global market for throwaway prices.
With globalisation also comes the whirlpool of speculative capital that invests in property and other commodity markets for short term profits which eventually leads to the development of a bubble.
According John Maynard Keynes this leads to the “enterprise becoming a whirlpool of speculation” .The financial capital advocates the selling of public enterprises and the complete withdrawal of government from any kind of business.The government just needs to facilitate investment . This speculative capital leads to a bubble that fuels an artificial demand and the the owners of capital makes huge profits.This does not involve any increase in productivity of any sorts . If the government performs any action sabotaging the interest of the financial system then the money is all together removed from the system.Demand in modern capitalistic system is artificial, mostly triggered by bubbles like the Dot-com bubble or the more recent housing bubble.In India too the credit card system involving a lot of sub-prime lending is triggering the consumption.
In the late 70s as inflation increased and productivity decreased due to various reasons . The international capital was not getting returns in traditional investment avenues like the banking system.Thus the demand for deregulation of financial markets was echoed in various sectors.Thus financial instruments and derivatives like Hedge funds became the new investment vehicles . The whirlpool of capital was seeing for soft targets to get short term profits . Thus they invest in various sectors like commodities real estate etc. As more and more money gets invested the price is artificially build up.The local government has no say in controlling the flow of capital across the borders thus making the local currency shoot up.If the government takes any steps to arrest this they will be awarded with the flight of capital resulting in the collapse of the bubble.
Thus the belief that globalisation is the way in which the rich countries are transferring wealth to poor countries is just a myth.Although in case of India it has benefited a small section of the nation it has increased economic inequalities manifold.
- For instance the percentage of agriculture growth in the overall growth has gone down.
- The percapita food consumption among rural poor has gone down drastically with more and more people suffering from malnutrition
- The sad story today is its better to be a poor in Palestine rather than to be a poor in India
- Regarding the GDP growth its mainly dependent on service sector which may represent a over hyped growth.
There is also this argument that India was miserable before the opening up of the economy people should not forget one thing todays IT growth owes its success to the public funding we did in education.The IITs-IIMs were necessarily started with government spending after attaining independence. Even the United states was a closed economy for more than 150 years after attaining its independence.
The current economic crisis questions the infallibility of the markets and the need to ensure checks on the flow of speculative capital into a nation like India.