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The Age of Crises: North And South After “Globalization” [Part IV]

By Farooque Chowdhury

03 October, 2010

The mainstream propagated that globalization was the machine that would produces milk and honey for all in the North and in the South. What is the state of the world after the globalization, the old juggernaut for subordination that was presented as a new one? The salespersons of globalization that they sold with all shrewdness and media-power tried to hide the fact: “Globalization is not a condition or a phenomenon: it is a process that has been going on for a long time, in fact ever since capitalism came into the world as a viable form of society four or five centuries ago” (Sweezy, “More (or less) on Globalization”, Monthly Review, Sept., 1997). A long quote, in bullet form, from Joseph Stiglitz provides a nice view, at least partial on “globalization”:

Discontent with globalization.

Outcomes: failures in development, disappointments.

Latin America: growth even in the 1990s was half of what it was in earlier decades, benefits of growth going to upper income groups, growing poverty, unemployment, crime, growing fraction of population in informal sector, without job protections.

Africa: decline in per-capita income.

Economies transitioning from communism to market: success should have been easy, but in fact, there were massive decreases in income, huge increases in poverty.

Growing inequality between countries and within most countries. Globalization has played an important role in these failures, predictable effect on inequality within advanced industrial economies.

Effects on developing countries: harder to explain.

Latin America, best “student” of Washington Consensus policies, followed advice of IMF/WB; capital market liberalization exposed them to huge volatility.

Privatizations were often corrupt.

Africa: exploited even in post-colonial world, exacerbating general problem of inequality.

Finance: Growing instability, 100 crises in last 30 years.

Money is flowing from poor countries to rich. Poor countries still bear brunt of risk; many are burdened by huge debt payments.

One source of crises: much done to protect investor interests, little done to protect the environment in developing countries from investors, who use limited liability to protect themselves after taking out natural resources. Bilateral investment treaties are one-sided.

International trade regime is unfair to developing countries.

Most of projected benefits accrued to rich countries: 70% of gains to developed countries.

The 48 Least Developed Countries were actually left worse off.

System is unbalanced, stacked against poor countries. Average OECD tariff on goods from poor countries is 4 x higher than on goods from other OECD countries. Rich countries cost poor countries 3 x more in trade restrictions than their total development assistance.

Little progress on agricultural issues: OECD countries continue to subsidize agriculture by 48% of total farm production, just 3% lower than 1986; maintain high tariffs.
There was a need for a Development Round to address these problems. But the Development Round agenda was mostly putting old wine in new bottles. Some elements were even anti-development. US and EU reneged on their promises. As it is, the round does not deserve to be called a development round. Even if successfully completed, would do little to benefit developing countries. Problem [is] not just in agriculture, also in manufacturing -- escalating tariffs. US refusal to go along with opening up to poorest countries. EBP (Everything but what you produce).

Risk: if completed -- belief that it was a development round, return to earlier regime.

Risk: if fails -- continuation of bilateral trade agreements, even more unfair to developing countries, undermining multilateral trading system.

Further problems: global warming, another arena in which global social injustices are being played out.

Major source of pollution: in the North, major consequences: in the South. Environment sacrificed for short-run commercial interests.

Reduced access to life-saving medicines.

No compensation provided to developing countries for environmental services.

No protection for traditional knowledge, traditional cultures weakened, and WTO rules make support difficult. Democratic processes undermined, e.g. by IMF conditionality. Global governance is undemocratic. Voice of developing countries is not heard. But even when it is heard, it is not listened to, dominated by North and by special interests. Rules made by advanced nations for advanced nations, for their interests, or for special interests within them. Problems of global governance highlighted by problems at the World Bank and IMF governance problems, contribute to bad outcomes. Failures of global governance also reflect failures in “democracy” within advanced industrial countries.

Special interests [are] dominating national interests.

And globalization, as it has been managed, has undermined democracy, reducing the scope for democratic decision-making.

Views about democracy, social justice, “social solidarity,” even the “rule of law” change at the border.

Democracies have learned how to temper the market economy, to make sure that most individuals benefit, but we have not yet learned how to temper the excesses of globalization.

US … used new position to advance parochial commercial interests, often in “unilateralist” manner.

Undemocratic processes, to the particular set of ideologies that underlie the policies.

Indeed, change is inevitable with changing the world.

New global geopolitics, new scarcities, changes after crises tend to be patchwork, setting in motion another crisis at a later date. If they fail, the problems of poverty, unemployment, and the environment may get worse (Making Globalization Work for Developing Countries, Sir Winston Scott Memorial Lecture, Central Bank of Barbados, November 2007).

The long quote needs no explanation and interpretation. Rather, the sharp observations point to crises in the global regime, for the poor countries, and ultimately, on the poor, the majority, whom the world system has, in the words of Martin Luther King, “given … a bad check, a check which has come back marked ‘insufficient funds’” (I Have a Dream).

[This is the 4th part of the introduction of The Age of Crisis by Farooque Chowdhury being serialized in Countercurrents.]

Also Read

The Age of Crises- Part I

Capital in Crisis Environment in Crisis [Part II]

Globalization of Crises [Part III]

The Age of Crises: North And South After “Globalization” [Part IV]

The Age of Crises: South: After The Great Financial Crisis [Part V]

The Age of Crises: Hunger Poverty Inequality [Part VI]

The Age of Crises: Banks And Financialization [Part VII]

The Age of Crises: Withering Unipoler Geopolitics- Part VIII