[asia-apec 819] Dr. Syed Husin Ali on Globalisation

[PAN Asia Pacific]

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From: mudali at pl.jaring.my (ali)
Date: 12 Oct 98
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Globalisation And Its Effects
Dr Syed Husin Ali

Globalisation is a process, not a situation. It generally means the process
that breaks down boundaries between countries and slowly transforms the
globe into a unit. In this global unit, communication becomes much faster
and countries nearer. People can fly around the globe, from one city to
another overnight; they can enjoy through television in Kuala Lumpur a
world football match that takes place in Paris at the same time; they can
carry out trade transactions of shares or commodities through the computer,
without having to meet and discuss face to face. All these have been made
possible by the development of electronics and communication technologies
that have taken vast strides during the last two or three decades.

The process of globalisation also occurs in the global economic
communications and transactions, although often in very unbalanced way.
This results from the expansion of multinational corporation (MNC) based in
the First World, often referred to as the global capitalist centre, to the
peripheries in the Third World. Many MNCs own or control large sectors of
production and trade in the developing third world countries. They often
extract large profits by paying low wages to labour and selling their
produce at high prices.

Economic control by several global capitalist countries result in strong
political influence over developing countries in the periphery. All this
gives rise to the development of economic and political structures at the
international level, which often play more important roles than the
national economic and political structures. Besides, they also encourage
the dissemination of what is characterised as the global culture; for
example, different types of ‘international’ entertainment, dress and food
have become more popular among youths than ‘national’ entertainment, dress
and food.

Historical Background

There is a general belief that globalisation is a new phenomenon that
developed in the eighties, especially after the fall of several socialist
and nationalist regimes, followed by the emergence of several Asian states
as capitalist powers with strong competitive ability. Some view
globalisation as the process of expansion of the influence of commerce,
industry, technology and knowledge from the capitalist centres to the
peripheries. So it has been regarded as an influential factor that can
bring about change and modernity to the less developed peripheral states.

Actually, viewed historically, globalisation process took place much
earlier. It began from what is known as the ‘voyages of discovery’, when
Vasco da Gama and Columbus went around the globe in search of wealth for
their rulers. In other words it began with the emergence of capitalism in
Europe about five hundred years ago. Its later development was in the forms
of colonialism and imperialism. A characteristic of these two systems has
been the economic exploitation and plunder of territories that were
colonised and peoples who were dominated, in order to ensure accumulation
of capital or wealth by the colonial or imperialist powers.

>From the qualitative perspective, actually there is little difference
between colonialism and imperialism with globalisation as it now exists.
Only that globalisation process may be deeper. Therefore, many regard
globalisation as a new form of colonialism or imperialism which can cause
losses and underdevelopment on developing countries and peoples influenced
or dominated by it.

In the past colonial era, military might was often used for economic and
political control or domination. This happens under present-day
globalisation too, as in the case of the Gulf War. Even if military power
is not used, economic sanctions may be imposed, as in the case against
Cuba, Iraq or Iran, which have to pay high price for refusing to bow to the
western capitalist power, particularly the USA. The superpowers can also
make use of international agencies to expand their global influence. For
instance, USA so often manipulates the United Nations Security Council to
further its global policies or strategies.

World Bank and IMF

Among agencies within the economic sphere which can be used by big powers
in the capitalist centre, especially USA, to influence or control the
peripheral states in the Third World are the World Bank (WB) and the
International Monetary Fund (IMF). Both were established in 1945. Voting
power in both is based on the amount of funds or capital contributed by
their member states. USA is the biggest contributor - 36 percent in the IMF
and 35 percent in the WB. In fact, USA together with other global
capitalist countries like Japan, Germany, Britain and France, have the
majority capital control and so enjoy voting majority to in both institutions.

When the WB or IMF give loans to any developing country, they often impose
strong conditions. Among them are those referred to as structural
adjustments within the economy and politics of the recipient country.
Economic or corporate adjustments involve steps to reduce costs and control
labour, so that competitive position can be improved. These often result in
the reduction of wages or increase in productivity without wages increasing.

Further, expenditures regarded as subsidies for social services, including
education, health and housing are reduced, and as a result help towards the
disadvantaged groups within society will be affected. Experiences in
various countries (like Mexico and the Philippines) demonstrate how WB and
IMF loans have resulted in them becoming dominated by USA via these
institutions.

LDP Policies

Countries which make up the global centres strongly practise capitalism,
and the most powerful among them is the USA. Capitalist systems in the
global capitalist centres spread to peripheral countries which are often
too weak to resist their influences. Various aspects of the capitalist
system are accepted by a large number of the peripheral countries which
want to follow the capitalist road to development. They may be summed up as
the LDP policies, standing for liberalisation, deregulation and
privatisation. Malaysia is one such country which has received almost in
toto these policies. This is consistent with her objective of developing
the country and modernising the people along the capitalist track.

The liberalisation policy encourages, among others, free market and free
flow of foreign capital. It is true that free market can encourage
efficiency and healthy competition, but it is also often motivated by the
desire to accumulate large profits, to the extent that the interests and
welfare of the people are often neglected. Many MNCs, which enjoy
monopolistic power, can determine their conditions over wages, facilities
and privileges to workers. For example, in order to attract capital into
the electronics sector, the Malaysian government provides many incentives
which benefit foreign capital, but which also incur losses to the country
and especially workers, through tax holiday to pioneer industries,
restrictions for establishing unions, low wages and hazardous jobs
particularly to women.

Deregulation strengthens the possibility of free competition by reducing,
setting aside or abolishing all restrictions or barriers, and one of the
consequences is that the position of the low income groups is weakened. Let
us take the regulations which exempt payment or impose low fees on health
or education for the lower income groups, for example. If these regulations
are removed following conditions set by IMF, which opposes subsidies being
given to any group, then surely it will create extra burden to the
economically weak.

In addition, there are also pressures from the superpowers - through IMF,
WB, World Trade Organisatio (WTO) and Asia Pacific Economic Cooperation
(APEC) - to remove trade barriers in developing countries, which are meant
to protect the economic interests of these countries, so that their doors
can be widely opened to capital and commodities from the powerful countries
in the capitalist centres. When this happens, then ultimately the economy
of the peripheral countries which are trying to develop, will be dominated
by the big capitalist countries. In this way the process of neo-colonialism
begins.

Privatisation, as widely known now, is the policy of transferring public
enterprises to the private sector. It is clear that this policy has
benefited only a small and privileged group, while at the same time
burdening the majority of ordinary people. It is true that privatisation
can be a better alternative when the management or administration by the
public sector is fraught with inefficiency, waste and corruption. But in
practice it is also well-known that pivatisation does not necessarily offer
a better and cleaner management. The management of water, electricity and
telephones after privatisation has not become any better than before, but
the charges and levies for these services have increased to the extent that
they have become burdensome on the people. So too, as a result of
corporatisation, fees for post-graduate students have increased, and will
soon increase for undergraduates too, although the standard of university
education has generally not improved, and in certain cases even deteriorated.

Regional Cooperation

Although the process of globalisation is taking place widely, yet at the
same time we find that many countries try to strengthen their positions and
protect their interests regionally. For example, several north American
countries have grouped themselves to further free market though the North
America Free Trade Agreement (NAFTA), which is a trade bloc. In fact, NAFTA
benefits USA more than the other member countries , and it allows USA to
carry out dumping in Mexico, especially of the most polluting industries,
and to open factories which pay lower wages to local workers.

Nearer home, APEC was formed on the initiative of Australia. Now it has a
membership of eighteen countries in the Asia Pacific, including USA,
Australia, Canada and New Zealand. The presence of these four countries
seems to serve as guarantee that APEC will not become a bloc that might
compete with NAFTA. Different from NAFTA, APEC is not a trade bloc and does
not give any trade or investment privilege to any member country. At
present the main role of APEC is to facilitate the process of consultation
which will ultimately allow for deregulation in the region, by breaking
down barriers existing in the Third World countries for the purpose of
protecting their own interests.

It is well known that there is fear among some members of APEC, especially
Malaysia, that APEC may be dominated by USA to further her interests. That
was why Malaysia initiated the formation of the East Asia Economic Caucus
(EAEC), but this initiative could not succeed because Japan was not willing
to provide the leadership requested of them, as she feared going against
USA. In 1997, USA requested that APEC should give preferential access to
its members.

There is pressure for all protective barriers or restrictions to be removed
by member countries, and this would obviously open wide opportunities to
USA to increase its influence and even domination in this region. Such
pressure has not been accepted for implementation, but USA will continue to
put the heat on so that it will be finally implemented. In fact, it has
been agreed that it will be implemented in stages by 2010 and 2020. When
this happens, then the developing countries and their people will suffer
heavy losses, because the capitalist or free market system that the USA
wants to introduce is based largely on economic control and exploitation of
the people and drawing out of huge profits in various forms.

Why Accept Globalisation?

Many leaders in the Third World have already realised that globalisation
and the LDP policies that come with it are dangerous. These policies can,
and in some countries have given rise to their own economic crisis. But
these leaders are the ones who, in the first instance, have been
responsible for accepting such policies. Following the acceptance of
globalisation and the LDP policies, these leaders have allowed portfolio
capital to flood into their countries for speculation; they approved and
encouraged short term loans in foreign currency; they sponsored
unproductive megaprojects; and they allowed for deficit in current accounts
to increase. In the end the values of their own currency and shares
depreciate. As a result prices of essential goods increase, real wages
decrease, many workers get retrenched and the economic crisis becomes more
serious until, in several countries, they give rise to political and social
crises. To check all these, Malaysia has introduced some regulatory
measures, especially to control foreign exchange. But its leaders are still
very much committed to neo-liberalisation and privatisation policies.

So, why do these leaders accept globalisation and LDP? Firstly, the waves
of globalisation are too strong and the influence of the superpowers too
great, that the leaders cannot stop them coming to and overwhelming the
Third World. Secondly, in the Asian region, many countries and leaders
accept capitalism as the best way to achieve progress and development. So
they readily accept the influence of globalisation that originates from the
global capitalist centre, although they realise some of its weaknesses and
dangers. Thirdly, some of the political leaders and leading economic
figures close to them regard globalisation, policies related to it, and the
capitalist system can provide huge profits to the same leaders and their
own groups. As has been amply shown, many among them have become rich and
powerful through greed, corruption and cronyism. These indeed have caused
the downfall of many of them.


Petaling Jaya
10 October 1998

Parti Rakyat Malaysia (PRM)
42, Jalan Masjid (3/69), 46000 Petaling Jaya, Selangor, Malaysia.
Tel: 03-7918704, Fax: 03-7744531, E-mel: prm at po.jaring.my
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