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The politics of globalization

The politics of globalization
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First Published: Fri, Aug 20 2010. 09 45 PM IST
Updated: Fri, Aug 20 2010. 09 45 PM IST
The rise of globalization as one of the main drivers of economic growth has led to higher incomes in what used to be called the Third World. It has also led to higher profits for multinationals, which have been able to use the lower costs of production in the developing countries to their benefit. At the same time, competition from millions of low-wage workers from places such as China and India has led to stagnant real wages for large sections of the US working class. In this paper, William Robinson discusses the political repercussions of globalization and says that it has led to the creation of a transnational elite.
Robinson says that as globalization takes hold, it gives rise to elites that have a vested interest in opening up the economy and providing an environment-friendly to international capital. These elites come into conflict with the old national oligarchy whose power was based on the local economy. The interest of the new elite is global and they are more interested in scouting for global opportunities. The impact on developing economies, says Robinson, is “the rise of new dominant groups and capitalist fractions tied to the global economy; the downward mobility—or proletarianization—of older middle classes and professional strata and the rise of new middle and professional strata; proletarianization of peasants and artisans and the rise of new urban and rural working classes linked to transnational production processes; the working class itself become flexibilized and informalized.”
The transnational elite is also behind the increasing power of supranational institutions such as the International Monetary Fund and the World Bank.
Wealth and economic growth used to be defined in terms of geography. There were First, Second and Third Worlds, and countries used to belong to these groupings. No longer, argues Robinson—we now have the First World in the Third, the Third World in the First. He points out that Hurricane Katrina exposed the third world conditions in which a part of the black population of New Orleans lived. A UN report released shortly after the hurricane said , “blacks in Washington DC had a higher infant death rate than people in the Indian state of Kerala.” At the other end of the social spectrum, we are all familiar with the rapidly rising wealth of India’s dollar billionaires. Robinson’s paper says it might no longer make much sense to talk of national development, because society is increasingly getting stratified along transnational social and class lines. The strength of the links between national economies was proved very forcefully by the global economic crisis.
Here’s the core of Robinson’s argument: “The cohesive structures of nations and their civil societies disintegrates as populations become divided into ‘core’ and ‘peripheral’ labour pools and as local economic expansion results in the advancement of some (delocalized) groups and deepening poverty for others. We find an affluent “developed” population, including a privileged sector among segmented labour markets linked to knowledge- intensive, professional and managerial activities and high consumption exists alongside a super-exploited secondary segment of flexibilized labour and a mass of supernumeraries constituting an “underdeveloped” population within the same national borders. This social bifurcation seems to be a worldwide phenomenon, explained in part by the inability of national states to capture and redirect surpluses through interventionist mechanisms that were viable in the nation-state phase of capitalism.”
In short, this is the reason for the increasing inequality within nations and the rising disaffection of groups unable to take advantage of the new opportunities. How to manage these contradictions is the major question facing governments throughout the world.
Write to simplyeconomics@livemint.com
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First Published: Fri, Aug 20 2010. 09 45 PM IST