The North will stagnate, South will grow, and the multinationals, aided by World Bank ideologues, will exploit the poorer countries for their own survival
THE World Bank (WE) has made a strong plea for concerted
action by the governments of the rich and poor countries
alike, to "reverse the long-run trend of widening international
inequality." In its World Development Report, 1995, it has
argued that the rich countries must preserve open trade relations and control their fiscal deficits. This would lead to high
growth rates in the rich countries, and maintain global
demands as well. It has said, "Globalisation of capital is likely
to usher in mutually beneficial capital flows."
In other words, the Bank has tried to demonstrate that the
interests of the rich and poor countries are convergent.
The data presented in the report, however, indicates that the
rich countries are caught in a'no go'situation. Technology has
set the limits to their growth and, hence, the scenario for the
rich countries is quite dismal. In fact, the Bank is projecting a
convergence of interests only as a strategy towards establishing
the control of the Western multinationals upon the world's
economy.
The major threat towards the achievement of this objective
comes, surprisingly, not from the poor countries but from "a
small but vocal minority" within the industrial countries,
"who fear they will lose from the movement of capital and
people across boundaries." The report, therefore, seeks to
establish, despite all data to the contrary, that the workers of
the rich countries stand to gain from the current phase of
globalisation. The fallacies in the Bank's approach can best be
appreciated by taking a look at what it had recommended a
decade earlier in its 1985 report.
At that time, too, the Bank had made much the same recommendations for the rich countries as it has done now. It
had said that reduction in deficits, reduced rigidities in the
labour markets and reduced protectionism against imports
from developing countries would enable the rich countries to
maintain income growth rates as high as 3.7 per cent per year.
The Bank had given 'high' and 'low' case projections. The
'high' case, was expected to take place if the rich countries followed the Bank's recommendations, while the 'low' case was
expected to take place if it was otherwise.
It is clear from the above figures that the rich countries had
been expected to grow at a minimum rate of 2 per cent per
year but they managed to achieve only a 1.2 per cent growth
rate. On the other hand, the developing countries had been
expected to grow on the higher side, at the rate of 3.4 per cent,
but there the achievement was in fact 3.7 per cent. Clearly,
therefore, while the rich countries could not even achieve their
'low' case scenario, the poorer countries exceeded their 'high'
case scenario!
Why have the Bank's projections failed so miserably
order to appreciate the reasons it is necessary to take a short
walk through history. The basic question is whether to
nology can grow in a continuous upward trajectory
or there long periods of technological stability, somewhat
plateau. The major technological innovations of the
Age - copper and bronze smelting, wheeled carts, sad
brick and stone buildings and ideographic signs- bar
taken place early, may be within the first 500 years
or so of the third millennia before Christ.
Then, for nearly 2,000 years there was
Like by way advancement of technology.
Towards the begining of the Iron Age, largely in Greece
And India, major developments took place in iron smelting
And metal-working, shipbuilding and waterworks. In the
DernaL -Me major contribution of the Roman
" of mechanical toys and the architecture of the
Ibm once again followed a period of another
iotachnologicall stability. The plateau was broken
both the invention of the gunpowder by the Mongols. Only in
the modern tiams, perhaps, starting with the steam engine,
technological advance once again took off in earnest."
Wheather such plateaus we inherent to the development of
technology and industry or not is an open question. But we
can gain some ind&ts into the present economic develop
ullsing them from this standpoint. If the advanced
r aftbe developed countries cannot update itself
amirecommic: consequences follow. First, profits
plaulliteii. into the construction of new industries.
0 saturation of production capacities in the rich
ind so a fall in the rates of profits there. This is the
alp investinent that we observe today. The returns
kiligiloar in the poor countries, because there are
no new emerging opportunities in the developed countries.
Second as noted in the WB'S 1995 report, "technological
change appears to be increasingly labour-saving." But that
does not seem to have happened with my of the recent steps
forward in ethnological development. Which means that the
unemployment situation gets progressively worse in the richer
countries.
The International Labour Organization has noted this in
its Report on World Employment, 1995: "Between 1974 and
1985, unemployment grew markedly in the countries of the
European Community. 1990-94 nullified all the improvements during the preceding period; in 1994, unemployment
returned to 1985 levels." The 1995 report of the wB also notes
that the hours worked per person in the richer countries had
declined from 52 per week in 1900, to 31 in 1986. This is
another indicator that fresh opportunities of employment
generation are not arising.
Third, businesspersons are not able to achieve competitiveness by the adoption of new technologies. As a result,
they
are seeking investments in other countries, offering cheaper
resources and labour to retain their competitiveness. This too
is the logic of foreign investment. The consequence is that
new
jobs are actually being created in the developing countries.
The Report on World Employment thus laments, "Five million
of the 8 million jobs created by the multinationals between
1985 and 1992 were in the developing world."
The result will inescapably be that there will be a
decline in
the growth of the rich countries. It can be
asserted that some
of the developments in world economy appear
to be
consistent with such a prognosis. At the same time, the
poor
countries may continue to grow, irrespective of the
policies
followed by the rich countries. That is precisely
what has hap-
pened in the last decade, notwithstanding the
wa's projections
to the contrary.
The multinationals see
opportunities arising mainly in the
poorer countries. They see
their operations within their own
countries becoming
increasingly complicated, with the greatest threat to their
interests coming not from the poor countries but from the
labour of the rich countries themselves. it is
for this reason
that the WB, as their spokesorgan, tries to assure
the rich
countries, especially their labour, that they have much
to
gain from globalisation. Again, it is for this same reason
that
the wB harps upon the great beneficial impact of foreign
investments, although it accounts for barely 11 per cent of
the
investments in the poorer countries. It is essential for
the
multinationals to continue to have access to the resources
and
labour of the poor countries in their drive for the
control of
the world economy.
The game plan is simple. The
multinationals have to relocate their facilities from the
rich countries, where opportunities are limited, to the
greener pastures of the poorer countries. For this purpose
they have to keep the labour in their
own countries quiet by
promising growth by globalisation.
O
This 'no go' situation has to be kept under wraps.
Cook rR
Simultaneously, they have to pry open the economics of the
poorer countries for their entry. Actually, there is no
synergy
between the rich and the poor countries. The latter
will grow,
no matter what the rich countries do. The rich
countries will
stagnate, no matter what anyone does. The game
is the control
of the economics of the poor countries. That is
the real battle
that is being fought today.
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