Seeking Social Justice through Globalization, Escaping a Nationalist Perspective
Globalization, from a “leftist” perspective, is often interpreted as a phenomenon that increases the economic, cultural and political powers of rich Western nations. Kitching assesses the various dimensions of globalization - production, trade, labour migration, finance and communications to argue that globalization is a phenomenon that can work towards alleviating the poverty of the poorest peoples and nations in the world. With the free movement of labour and capital, which today does not take place, globalization of production based on comparative advantage could increase production for all. Instead of thinking of total production in the world as given and thus winning and losing as a zero-sum game, it could increase the size of the pie and hence everybody's share of the pie.
While MNCs figure predominantly in the debate on globalization, the author argues that it is really globalized economic activity in which hundreds and thousands of little firms participate that forms the basis of today's global trade and production. MNCs may actually even be better employers than most of these small firms because they can pay higher wages in poor countries which are much higher than in rich countries but still higher than what the local firms pay their workers.
Similarly, today globalized financial markets are not the result of a few speculators who wish to make profits. Though it is George Soros or LTCM that get notorious for speculating in global financial markets, and putting the entire financial system of many a nations at risk, it is “sweet old Mr and Mrs Brown” whose pension fund was invested heavily in Asian stock markets in the late 1980s and early 1990s. When this pension fund and others like it abandoned these markets in the Asian crisis, they caused a run and pushed many countries over the brink of disaster. Among today's biggest investors are the old and retired who look for the best returns for their life-time savings. Their pension and insurance funds hunt markets all over the world for the highest earnings. Reduction of capital controls as well as the development of telecommunications that has greatly speeded up the process of transacting in these economies has helped the financial system across the globe to become one big whole. Further, it is the slowdown in growth in the developed countries and the relatively higher growth in emerging economies that make the investors look for investment opportunities abroad.
Bipolar theories in which all winners (or losers) were in one part of the globe are, according to the author, no longer adequate to describe and explain a world that has, in the last 30 years, become far more complex. It now makes far more sense to analyse inequalities in India in the same class framework as in the US. Such changes in the real world have led to changes in language from the use of the term “imperialism” to globalisation because it is a single system (capitalism) globalising itself rapidly.
One of Ketching's main arguments is that the process of globalisation and judgement on whether it is desirable or not is affected, explicitly or implicitly, by nationalist feelings. He asks whether when addressing issues such as the welfare of workers, employment, economy and poverty, the left intellectual in a rich country understands these terms with a particular nationalist prefix or on a global level.
Kitching questions the “left” or “starving babies” conception of underdevelopment. Despite their insights and understanding of western societies as divided along class lines, these intellectuals almost forget class divisions in poor, developing countries. As a result they tend to treat poor nations as if they were classless, and ignore the class structures and the shifting dynamics of that structure. They are apt to treat non-European societies as if they were somehow less socially and ideologically complex than their own and somehow “primitive”.
A large body of literature on poverty in the world and estimates across the world examines GDP growth and per capita GDP trends but often tends to ignore the social economic or class-inequality dimension. Western authors are often embarrassed by, and therefore unwilling to draw attention to, these class differences which are often much sharper than in the rich countries. His criticism, seems somewhat sweeping, because even though a large body of literature that does not address class issues may exist, which the author attributes to what he calls the “intellectual left”, and does not address issues of peasantry, of class, religious, ethnic and gender relations in poor countries, there does exist, albeit small, serious and in depth work by good scholars on these issues. What the author's seems to include in the “left” is indeed quite different from the concept of “left” in the developing world, which tends to be more Marxist. It is a modern western concept that appears to include the UNDP, the World Bank and the UNCTAD, agencies that the average Indian would hardly consider leftist.
The book offers interesting new angles to old issues. However, the author's solution that if some people decide to commit themselves - both intellectually and in political action - to principles that involve thinking globally, the poverty in poor countries could be sharply reduced, appears to be naïve and too simple. Political support is unlikely to be available to such groups that are not backed by direct beneficiaries, except, as the author argues, the poorest in the world, who too would benefit in a time horizon of around 30 years.
The arguments in favour of a Ricardian world, with nations producing according to their comparative advantage, found in text-books on trade theory, are simple and convincing. However, efficiency gains in a Ricardian model, a model that assumes constant returns to scale and perfect competition, occur only in the simplest case. Increasing returns to scale and imperfect competition violate these conditions. There exist strongly entrenched vested interests in various parts of the world, such as labour in the rich countries who stand to lose, and capitalists in poor countries who would be the losers in a global economy with the free movement of labour and capital. The political economy of the move to such a world involves a lot more than simple intellectual commitment by a few people. While one often finds solutions devoid of a political economy context in economics text-books, such omissions from a political scientist appear quite surprising.
(The author is a Senior Fellow at the Indian Council for Research in International Economic Relations)