11:40 AM Sep 9, 1996

GLOBALIZATION OR DEVELOPMENT

Colombo 5 Sep (TWN) -- The first priority of developing countries for the Singapore Ministerial Meeting of the World Trade Organization (WTO) in December should be to bring about changes in the rules of the WTO and its agreements so as to make 'equity' and equitable distribution of benefits of trade an integral part of the WTO trading system, a leading Third World analyst said here.

The advice came from Mr. Chakravarthi Raghavan, Chief Editor of the South-North Development Monitor-SUNS and Geneva Representative of the Third World Network.

Raghavan, an eminent Indian journalist who has been closely monitoring and analysing international economic, trade and development issues and negotiations at the GATT/WTO, UNCTAD and other international organizations for nearly three decades, was delivering the Ninth Dr. N.M.Pereira Memorial Lecture here before a distinguished invited audience.

Mr. Bernard Soysa, Minister for Science, Technology and Human Resources Development of Sri Lanka and President of the NM Pereira Memorial Centre, who presided over the lecture, complained of the attempts of the World Bank and other institutions to put conditionalities on the South using the concept of 'sustainable development' to curb 'development'.

An intellectual, eminent economist, Trade Union leader, freedom fighter in Sri Lanka and India, and a political leader who stood by his principles, Dr. N.M. Pereira (1905-1979) as Finance Minister of Sri Lanka in the 1970s, had played an important role in the Group of 77 and its efforts to overcome underdevelopment.

Speakers in the annual lectures in earlier years included Dr. Gamani Corea, former Secretary-General of UNCTAD, Mr. Rajni Kothari, Indian political scientist and Dr. Lal Jayawardene who headed the Helsinki-based World Institute for Development Economics (and now currently economic advisor to the Sri Lanka President).

Raghavan said the South Countries in signing on to the WTO agreement now faced many constraints in their policy options for development, and were yet to make a full assessment of the implications of the WTO.

In this situation, "wisdom requires they should not agree to more constraints" -- by agreeing to take on new issues at the WTO and frame new rules.

As they neared the end of the century, the world was full of many uncertainties, and this was a time for reflection, not for adventure, leave aside Marxian adventurism, he said.

"When one is already in a hole, one should stop digging deeper, but think of how to get out of the hole," Raghavan said.

He recalled the view of the WTO Director-General, Mr. Renato Ruggiero, at the Round Table of Heads of Agencies at UNCTAD-IX, that the WTO's responsibility was only to reward the most efficient producers in the world and enable global mobilization of resources, but that equity and equitable distribution of the benefits was not the responsibility of the WTO, but of governments and other organizations.

Equity and equitable distribution of benefits cannot come through 'aid' programs or 'safety net' approaches, but through state intervention to balance the 'efficiency' of the market with considerations of equity.

And if it is not responsibility of the WTO to ensure 'equity', and when the WTO rules prevent state intervention in the 'market' to achieve equity, "governments making up the WTO must change the rules and this should be their first priority," Raghavan said.

"Otherwise the WTO trade order and system, and this type of globalization and integration, will lose public support," as it is already is in the North and the South, he added.

And unless they joined hands in a collective effort to resist Northern onslaughts on them through the WTO, for a TNC-led integration of the world economy, the countries and peoples of the South face the prospect of "Globalization or Development", Raghavan warned.

The speaker cited a number of studies and writings of eminent economists to ridicule the hype being created about globalization and benefits of neo-liberalism, and said in many respects the current process was not very different from the laissez-faire order that prevailed for about two decades in the last century. But unlike now, when frontiers are firmly shut against browns and black immigrants from the South, at that time all factors of production moved freely.

That laissez faire order under British leadership failed, and continental Europe and the United States industrialized, not through 'free-market-free-trade' dogma, but behind high tariff walls and an active state role.

But the major parts of the current South, whether as colonies of European metropolitan powers or through unequal treaties as in Latin America, were forced to practice laissez faire and have low tariffs favouring manufacturing exports of the colonial powers. The poverty and under-development afflicting the South was a direct result of this laissez faire and 'openness' to trade and investment, which not only prevented their participation in the industrial revolution, but resulted in 'de-industrialization' of the South.

And through the neo-liberal order, their efforts to catch up and industrialize fast are being sought to be blocked, and the result in the South would be the same as in the 19th century.

This neo-liberal order has been sought to be imposed on the developing world since the 1980s, first through the Fund-Bank Structural Adjustment Programs, and now through the World Trade Organization and its rules.

The New Order, where the sole 'Super-Power', the United States (and its allies), has placed itself above the law (as demonstrated by the missile strikes against Iraq to serve domestic electoral purposes), and the neo-liberal order being promoted by the BWIs and the WTO were all part of a single design.

If the arguments for globlization and liberalization are accepted uncritically by the South and its leaders, it would result in the economic 'recolonization' of the South, with Southern governments acting as night watchman to protect rights of foreigners and TNCs against their own people, Raghavan cautioned.

Many of the policies now being pushed on the South by the BWIs and the WTO had been part of the laissez faire economics of the late 19th and early 20th century. These had not succeeded, and had brought about rising unemployment and failures culminating in the Great Depression and were abandoned.

These same policies had now been resurrected under neo-liberalism and the socalled "Washington Consensus", and had been uncritically accepted by Finance and Trade Ministers and officials, leaders of government in the South, and the media. The peoples of the South are being asked to accept the dogma and promises of a better future on the basis of "faith" and "belief" which have no place in secular life and politics of countries.

Economic theory was being fashioned and promoted on ideological grounds by a close group of economists and policy-makers who read and cite each other and, with high-tech econometrics and computer models based on largely unverified and questionable assumptions. And an international 'reward' system is being operated to ensure that these views are uncritically accepted and promoted by economists, bureaucrats, technocrats and journalists in the South.

Finance Ministers of the South, policy-makers and public, and Heads of Governments/State, should not allow themselves to be dazzled by these high-tech economics and econometrics, but examine them very carefully, apply common sense and look at past experience.

The New Order and the state of international relations associated with it since 1989, Raghavan said, appear to have brought with them an unabashed assertion of Power and racist superiority by the predominantly white North, a repudiation of the need for the powerful to obey the law, an end to compassion on the part of the powerful and the rich to the weak and the poor, and greed as the driving force of this civilization.

But the initial euphoria, and the 'triumphalist view' about New Order, have now given way to more sober assessments which see the outcome as at best one set of problems having been substituted by another, and the beginning rather than end of history. In some ways the world, and nations and peoples, seem to have become more unmanageable and ungovernable, and with more rather than less conflicts.

Since about the mid- to late 1980s, there has been the rise of this neo-liberal theology and dogma, and the more fashionable talk of Globalization, as an 'unstoppable' process in the world economy -- where all geographical and political boundaries have virtually disappeared or are about to disappear and State power is 'withering away'-- not in the way Marx and Engels had envisaged, but as the final triumph of the Market, Raghavan noted.

"Some of the descriptions, and stern advice to everyone to accept this new theology, makes one think of it, as a fast train without any driver, rushing on its tracks through stations where some people can jump on to this train, and others, whether bystanders or unsuccessful leapers to the train, are sucked in its wake and come to grief. The language used by proponents, and the stark options posed, and calls for sacrifices now for benefits in some distant future, are akin to the exhortations and warnings of some fundamentalist religions and cults.

"All international and intergovernmental development discourse have come to accept this theology of Globalization without question, and all development talk is confined to how to help those not on the train to spurt and jump aboard."

But while there has been a well-publicized outpouring of hype about this globalization, there have also been some sobering analysis and studies, bringing out inconvenient facts and pointing to the likely adverse impact on developing countries. Policy-makers in the South should pay attention to them.

The latest UNDP's Human Development Report, had brought out that economic growth has failed for a quarter of the world's people and that 89 countries are today worse off than they were a decade ago. Among and within countries, the rich have gotten richer and the poor poorer, and in the past three decades, the assets of the world's 358 billionaires exceed the combined annual incomes of countries accounting for nearly half (45 per cent) of the world's people or 2.3 billion people.

"This neo-liberal order, this liberalization and globalization, in process since about 1980, has not succeeded in resolving the problems of the people. It has failed in the industrial countries where their poor performance can be directly traced to the basic elements of this new liberal order. And in the developing world, after over a decade of adjustment and belt-tightening, the common man is faced with demands for more sacrifice and belt-tightening and adjustment.

"This.... Globalization is not a path to Development, but a beguiling path ... to an unknown destination. And if the past is any guide to the future, this neo-liberalism and globalization is as certain to lead to disaster and conflicts as the liberalism of the 19th century."

History, and even more the experience of industrial capitalism over the last 150 years or so, have shown that inequity and vast and growing differences among classes of people are no basis for stability or sustainability of societies. And whether countries have formal democracy or not, no system will long survive unless there is a basic acceptance from society.

Laissez faire failed in the 19th and early 20th century because public support for such policies gradually evaporated in the face of unemployment and hardship for the masses of people.

Signs of similar loss of public support have begun to emerge, in the North and the South, despite the media hypes and the periodic reassuring statements from the protagonists.

"It is hence time to re-think," Raghavan said. "This does not mean going back -- either to command economies or the Keynesian interventionist state. Both failed to deliver, just as the neo-liberal order has. But it does mean need for review and change of course, modifying and adapting policies to the facts on the ground, and not cling to theories that have no facts to back them.

"For the developing countries who have the most to lose, the starting point could well be for their governments to join hands and function in a more coherent and coordinated way in the WTO and the UN fora, and resist further attempts to put them into a straight-jacket of more disciplines for a neo-liberal order.

"The South countries must pause and each ask themselves whether their actions of the last decade or more in abandoning their collective efforts, and trying individually to jump on to this 'globalization train' has brought them any success."

Globalization is not something inevitable, but the result of a set of rules of the game in communications, trade, finance and other areas, set by governments through their actions and inactions.

The rules that facilitate this TNC-led process of neo-liberalism can be changed, and if governments of the South do not join hands to change the rules, there will be social disorders and the people will change the governments.

In thanking the speaker, Gamani Corea said that while it was true that the world economy had undergone changes, and old policies need to be adapted, "yesterdays words and policies cannot be replaced by the day before's or of the last century." There was no single development model or economic theory applicable to all and Governments of the South must evolve coherent policies suited to their particular needs and apply them.