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February 6, 2004
Conflict over New World Economic Order
The world economic order that has emerged after the collapse of the Soviet Union, is known as Globalization. Although it is the currant and dominant system, it is not yet universally accepted as the ideal system for the good of the entire world community.
The continuing conflict over this was manifested in the deliberations of the World Economic Forum and the World Social Forum held in the second half of last month (January, 2004) in Davis, Switzerland, and in Bombay, India, respectively.
This was the 34th annual session (January 21-26) of the Economic forum generally known as the club of the world’s rich and powerful. The Social Forum, on the other hand, was holding only its 4th session (January 16-21), since it was set up after the fall of the Soviet Union and the emergence of the US as the sole super power, to draw world attention to the excesses of capitalism and neo-colonialism in the guise of globalization of world economy.
The Social Forum set up as an antidote to the Economic Forum has essentially a shadow relationship with it. A Bombay paper called it a “mela of the marginalized”. Attended by some 100,000 persons, with a generously sprinkling of dancers, singers and other spectacular activists, it did create the atmosphere of a large carnival of fun and frolics, giving a taste of local culture to thousands of foreign participants through music, theatre and art. Bombay, in any case, is a lively, fun city and the seat of Indian film industry that produces more films than Hollywood.
Yet, it did convey several serious messages in favor of the poor and deprived through its numerous seminars and workshops that were attended by eminent social workers, thinkers, writers, economists and even Nobel Laureates.
The World Economic Forum of Switzerland is the brainchild of Prof. Klaus Schwab who set it up in 1971 “to contribute towards solving the problems of our age” To the first session held in January, 71, he invited European chief executives to discuss business strategy. Over the years, the agenda has expanded and the Forum is now a member-based, not for profit organization. Paying members include some 1,000 big companies. Since the collapse of the Soviet Union, this Forum has, in essence, been calculated to boost support for globalization.
Its guest list reads like a cut down version of who-is-who in world business and politics. Thus the forum serves as a significant networking event, and an opportunity to get close to high-powered people. Over 2,100 participants from 94 countries including more than 30 head of state or government attended the sessions. President Musharraf was also present.
Main topics that came under discussion this year included reconstruction in Iraq, transatlantic tensions (a mismatch of the philosophy of the US and the European Union), corporate governance (how to avoid scandals like that of Enron), global warming, and more importantly how to take care of the threats like that of 9/11 to big businesses.
According to Thomas Friedman, N Y Times columnist who witnessed the deliberations, while Vice President Dick Cheney made a firm, low-key defense of the U.S. policy in Iraq, a senior official informed reporters that the Bush team was ready to give the U.N. whatever authority it wanted to help oversee Iraq’s transition to elections. “It turns out that while there is no regime in the world that the US can’t destroy on its own, there is also none that it can rebuild on its own.”
The Forum, no doubt, is an excellent facility for the cross-fertilization of ideas. The differences between Europe and the US have narrowed and a better understanding developed of each other’s point of view at this meeting. Of course, their differences converge in the context of the thrust of Globalization.
Ideological conflicts and the raison d’etre and emergence of the World Social Forum make sense when the effects of capitalism and its extreme form - Globalization - on the poor countries are taken into account.
Kamal Mitra Chenoy, a prominent participant of the Bombay meeting stated the issue in the following words: “Institutions like the IMF, World Bank, World Trade Organization, and above all the giant transnational corporations have attempted to skew an already unequal world economy in favor of an exclusive, globalized elite against the interests of the vast majority of humanity.”
It is mentioned in this context that a recent report of World Bank itself had pointed out that a sixth of the world population living in North America, Europe and Japan received 80 percent of world income, and an average of $70 a day per person. The 57% of the world population in the 63 poorest countries received only 6 per cent of world income, an average of $2 per person per day.
This disparity in a world that is fast becoming a global village, thanks mainly to American technology, presages cataclysmic eruptions such as massive migrations, starvation deaths and local wars.
World economists have therefore been advocating measures to gradually reduce polarization. But greed being the chief driving factor for corporations dominating world economy, only lip service is given to reducing world poverty. There is hardly any indicator of the gap noticeably narrowing down.
The setting up of the World Trade Organization (WTO in 1993 has, contrary to promises made, brought down the customs barriers allowing the rapacious corporations of the rich countries to exploit unhindered the fragile economies of the poor. The tide of free trade, it was argued, would lift all boats -big or small. It has not. It has instead sunk some owned by the poor.
Adam Smith, the father of modern capitalism and the author of its bible “Wealth Of The Nations” must be turning in his grave, as his prediction that an “invisible hand” would guide the rich to better the lot of the poor remains unfulfilled. It gave a humane and compassionate face to capitalism. But, capitalism as operated by multinational corporations has no such face; its actions are driven by ruthless greed for profit.
Dr. Henry Kissinger, a former Secretary of State and a renowned intellectual warned in a syndicated column as far back as October 1998: “Free-market capitalism remains the most effective instrument for economic growth and for raising the standard of living of most people. But just as the reckless laissez faire capitalism of the 19th century spawned Marxism, so the indiscriminate globalism of the 1990s may generate a worldwide assault on the very concept of free financial markets.”
While globalization has done away with national boundaries in the economic sphere, such boundaries remain on the political side. The world continues to be divided into over 200 nation states. This incongruity, this mismatch between the two closely linked spheres of the world community give rise to serious apprehensions about the turmoil and eruptions waiting to happen.
The deliberations at the forums in Davos and Bombay reflect this conflict. Policy makers in the rich countries would be well-advised to seek a synthesis by putting a compassionate face on capitalism and market economy, as envisaged by Adam Smith. To begin with the debts of poor countries unable to pay them back may be written off. President Bush had suggested to the World Bank to give half of its funds to the poorest countries as grants.
Policy makers all over the world interfere in the operation of market forces when their national interests are involved. The U.S. subsidy to its agricultural products is a glaring example.
The poor countries expect interference to ensure them just a place under the sun. This cannot be achieved till the current system of unmitigated imperialist greed is replaced by compassionate capitalism as envisaged by Adam Smith.
arifhussaini@hotmail.com January 30, 2004
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