(2002)

THE CHALLENGE OF GLOBALIZATION

(AFRICA CASE)

An elusive concept

The world today faces many challenges. Perhaps, the most serious is the challenge to the existing world order manifested by globalization. The term "globalization" is the most elusive concept of international relations. It seems that the concept is little understood. It has at least several important features that should be taken into account.

The impact of globalization on Africa, especially on African societies south of Sahara, is powerful and often worrying. The inflow or outflow of financial capital may destroy or, on the contrary, revive the economy of any of them. That is true. At the same time in Africa the impact of globalization is such that even states and local elites confront the danger of being either destroyed or integrated into new world order.

The same danger looms before Russia and many other countries.(Globalization is a subject of scientific discussions by the Russian Academy of Sciences: The state and globalization, Institute of World Economy and International relations, Moscow, 2001.) We also see the weakening of the United Nations status and witness international actions that bypass the international law.(Alexey Gromyko, Anatoli Gromyko, Quite revolution in the United Nations. Will it happen? Nezavisimaya gazeta, June 22, 2000.)

It is impossible to discover the author of "globalization" concept – my efforts were in vein. As if from nowhere a sort of a new global constitution has been shaped before us. It establishes the rule of international relations by private corporations.

Globalization, explained as networks of interdependence across the world, is not new at all. The whole second half of the XXth century developed in the framework of global problems studies. Studies on interdependence were conducted all over the world. At the core of research was the scientific-technical revolution that embraced international relations.

In 1973, together with Dr. G. Hozin, I published a book on global problems facing the world. We came to the conclusion that only through international cooperation on the global base humanity can solve many of its economic, political, ecological and social problems. We also studied the role of transnational corporations and its influence on international relations and especially on developing countries. We stated that a just juridical base must be found in relationship between transnational and sovereign states.(Anatoli Gromyko, Grigori Hozin. Scientific-technical revolution and international relations. Moscow, Znanie, 1973.)

Studies on globalization nowadays touch upon many new subjects of research.

The former Director-General of the World Trade Organization (WTO) Renato Ruggiero frankly admitted that the Multilateral Agreement on Investment (MAI), proposed lately, is ultimate statement that only the corporation has rights, not governments. The MAI may prevent governments from interfering in foreign investments in any way. No country can prevent entry by foreign companies in any economic sector. MAI may develop private corporations "legal standing" to sue governments. It is designed to become the "constitution for a single global economy".

The more we study globalization phenomenon as a concept, as a summary of the contemporary human conditions, the clearer it becomes how diversely it is being understood.

For example, Prime Minister of the United Kingdom Tony Blair understands globalization as "a fact of life… globalization offers opportunities for rich and poor alike. The difference between us is the effort needed to harness and exploit those opportunities. Making funds flow to where they are needed most requires the establishment of rules-based economic and financial systems. It requires stability and sound macroeconomic policies and export credit practices. It requires transparent financial data and responsible credit ratings. It needs capital account liberalization. These are not exciting or inspiring objectives. But they are essential to ensuring that as many people as possible benefit from globalization" (Choices, volume 9, number 4, December 2000, p. 19.). Such is a view from London.

The Prime Minister of Japan Yoshiro Mori stated: "It is my firm belief that globalization must bring forth benefits for all countries and all people… globalization has brought greater complexity to the issues that face the world today. If we are to resolve these issues, cooperation among not only developed and developing countries but also other diverse actors such as international organizations, business and NGO’s is indispensable".

From the President of the Czech Republic Vaclav Havel we hear an opinion: "The current rules of international cooperation are not bringing the same success to all countries. On the contrary, they deepen the differences in the speed of development" (Ibid., p. 16.).

The President of Mozambique Joaquim Alberto Chissano is of an opinion that: "Poverty is not just a threat to poor countries, it is a threat to the international system itself. Therefore, it requires a comprehensive and global approach… liberalization is not serving the purpose of eradicating absolute poverty… Sound policies deal with the main components of poverty: illiteracy, debt and health care… We cannot do it alone."(Ibid., p. 17.)

Such are the views from Europe and Africa from highly placed officials. It is important also to hear what the President of Nigeria Olusegun Obasanjo frankly thinks of globalization: "We have to eliminate poverty before we can benefit from globalization. Talking globalization to the poor is like speaking Greek to an illiterate Villager. It doesn’t mean anything to him".(Ibid., p. 17.)

The selection of global issues and even more their analysis cannot be free of all bias. Very often evidence as understood by different people, including scientists, leads to different conclusions. Perhaps, it is impossible to escape the influence of particular interests. It is only natural that where we stand on the issues often depends on how the globe looks from the country where you work and live.

The role of science is to obtain knowledge and to propose ways to use it to the benefit of humanity and a given entity. Scientists strive to avoid polemics with extreme views, to play with definitions. The main role of science is to come as close as possible to objective truth and at the same time to propose realistic decisions, which may differ but not to exclude rational politics in solving a problem. In this sense social science is looked upon by many people as society’s main positive and even productive force, the decisive factor of modern human development.

The voice of social sciences is still relatively weak in comparison with the influence of other actors on national and international arenas. The international space is occupied more and more by new actors, especially transnational corporations (TNCs), international financial conglomerates. Mass media became a transnational business and plays powerful role in formulating social behavior and views. World communications systems develop electronic devices and often spread information in an explosive, often contradictory manner.

An important reality of globalization is the mobility of world capital. More then one trillion dollars shift every day from one country to another, change hands of private owners. In this new global environment the functions of states are modified and weakened.

Globalization goes hand in hand with the rise of neoliberal ideology with its set of postulates on advantages of liberation of the market relations from state regulation and even state boundaries. The neoliberal ideology strives to reduce the state to machinery that serves private business. Neoliberalism acquires the features of authoritarian ideology.

Its main postulates are:

Small and local firms will make way for transnational corporations;

if a corporation is global, it has absolute rights in every country to do business there or walk out if it is not profitable;

the main purpose of business is to maximize profits and returns on investments;

all governments and citizens must assist such economic and financial global activities of multinational corporations.

At the start of the XXI century there are some 45.000 transnational corporations in the world, with some 300.000 foreign affiliates.

Are they a threat or a promise for domestic economies and prosperity of the people?

Is globalization a natural phenomenon or a project imposed on human society without its choice?

Will it lead to stabilization of international relations or to world anarchy?

What is sacred and what is dispensable for humanity?

If we are one "global village" such questions must be answered. Otherwise "a new geography of power", based on globalization, will be disputed by most peoples.

A case for globalization

There exist a strong case that favors globalization as the only possible road into the future. In the 1970’s capitalism covered not more than 20% of the world population. By the end of 1990’s it took control not less then 80% of earth population. Humanity became integrated into global capitalist economy. There are some exceptions: Cuba, North Korea, Belarus. China is still a socialist-oriented state with large segments of a market economy.

Today there is more global trading. From the 1970's global financial markets, including offshore business rapidly proliferated. There exists global circulation of vast amounts of money with unprecedented financial mobility. A new type of global companies emerged. They have shareholders from all over the world.

There emerges a global consciousness, more global cohesion. Such development is fostered by growing density of communication means. Communication networks grow rapidly. Consumer market has also to a large extent integrated. The same products and advertisements are seen all over the world. Globalization is promoted by modern technological developments.

Supporters of globalization claim that the national state has lost most of its sovereign and decision-making powers.

They also insist that worldwide open and competitive markets promote global prosperity and lead to better employment, quality of goods and services, lower consumer prices.

The process of globalization is seen as unstoppable. Globalization in other words is a reality. Humans must adjust to these developments and agree that the nation-state can no longer be governed without taking into account external factors over which it has almost no control.

Globalization sometimes is painful as financial crises in Asia, Russia and Latin America have demonstrated. But the benefits of trade and financial globalization outweigh any associated costs. Governments of a nation-state should not resort to protectionism that is a self-defeating strategy. Globalization is a world of immense promise but also of complexity and difficulties.

Globalization is in fact a revolution with its own contradictions. Taken as a whole the system of global developments must be dynamic.

United Nations is uniquely suited to promote global transformation. Its aim is to develop international treaties to foster global corporate activities. UN must be in favor of new internationalism and creation of civil societies without borders.

All in all, supporters of globalization see human conditions at the dawn of the new millennium closely tied to the world structure of a hierarchical nature with USA economy and new multinationals at the top.

A case against globalization

Global economy is in fact the economy of just a few rich countries. Most world trading is not global. It takes place within geographical regions. The contribution of developing countries to international exports decreased from 30% in 1950 to 20% in 1990. The share of the least developed countries in world trade is almost nonexistent. It decreased from 0.6% in the 1970’s to less than 0.3% in the 1990’s.(Global Dialogue, volume 1, number 1, summer 1999, p. 2.)

Capital flows, so called financial mobility, are one type capital: short-term speculative investments, not productive capital. Rapid money poses serious risks.

Not a single of hundred largest international companies can seriously be called "global". They retain national management and local research and development. "Global solidarity" exists but is confronted by many people across the world who do not feel to be a part of a "global family".

The world is divided and fractured on many counts. There exists the growing economic disparity between the North and the South. Different social groups within most countries have highly unequal economic and social status.

Growing density of communication flows around the world is not "global" at all. By early 1997 62% of the world’s main telephone lines were in use in just 23 affluent countries accounting for only 15% of the world’s population. 950 million households had no telephone.(Global Dialogue, volume 1, number 1, summer 1999, p. 3)

The increasing visibility of western-type consumer goods around the globe is not the same as their availability. There develops an explosive disparity between visibility of consumer products and availability. The world spent in 1998 some 24 trillion US dollars in consumer expenditures. 80 per cent of this sum was spent by 20% of "global population".

Globalization promotes the interests of the world’s most powerful players. Some transnational corporations have revenues that exceed the gross domestic product of middle size industrial nations.

Critics of globalization insist that "globalization has meant different things, at different levels, for different categories of people. Millions of farmers, immigrants, poorly qualified urban workers, youth and women suffer globalization’s negative consequences; they are marginalized and excluded from the new world economy".(Rodolfo Stavenhagen, UNESCO sources 73 (Paris, October 1995), p. 27.) The critics also state that what we witness in the 1990’s on the world arena is the "globalization of poverty".

Some figures, for example, show the sevenfold rise of poverty in Eastern Europe since 1989. The ratio of the richest 20% of people in the world to the poorest 20% rose from 1:30 in 1960 to 1:80 in 1995.(Global Dialogue, volume 1, number 1, summer 1999, p. 5.)

What is a link between globalization and employment? The critics argue that employment conditions are worsening. Economic growth leads to less employment ("jobless growth"). Increasing numbers of people are being laid off. When employment figures rise, this refers mainly to part-time and temporary jobs. Privatized enterprises do not pursue employment policy objectives. Their aim is to operate with smaller labor force in order to reduce costs.

The critics of globalization turn our attention to a fundamental fact: it is impossible to raise the living standards of poor people to those of the privileged minority. This can be done only through reduction of the privileges of the rich. The resources of the world are not enough to achieve rich life for all without ecological disaster.

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As we see, "globalization" has many meanings. It has political, economic and moral agenda. The concept is used to describe and explain modern social processes. It has supporters and critics. Globalization is charged both with big opportunities and dangers. It gives rise to the phenomenon of mass migration with huge population shifts when people leave their countries to seek work abroad. With advance of globalization we may see further huge population shifts.

To a large extent "globalization" is used by many people as the analytical tool to explain modern social processes. On the one hand, it is used to provide arguments for the integration of the world’s economy, communications and even culture. It explains globalization as a powerful economic force that develops along the only possible and rational path that offers more promise than threat. On the other hand, the critics insist that globalization may bring to humanity more threats than benefits, more harmful effects that will destroy people’s way of life and is undemocratic. To globalize human’s ways of life in reality is to bring about a destructive situation and anarchy.

In his book "The New Century" Eric Hobsbawm underlines a very important conclusion: "Globalization, in a sense, means wider access, but not equal access, for everyone, even at its theoretically most advanced point. Similarly, natural resources are distributed in an unequal manner. The problem with globalization is its aspiration to guarantee a tendentially egalitarian access to products in a world that is naturally unequal and varied. There is a tension between two abstract concepts".(Eric Hobsbawm, The New Century, ABACUS, 2000, p. 65.)

Tensions within globalization

There are many tensions within globalization. If at the level of global economy the common denominator of human life are money and profits, standardization and homogenization, when the world is transformed in such a way, when financial dealings are many times greater than world’s total real product, when the tolerable limits of homogeneity are neglected, than one may expect a social and political backlash.

Humanity, with an exception of new strong nations, is already confronted with a possibility, as the German political scientist Ulrich Beck states, of "jubilant public suicide" committed by politicians who exalt the market.(Ibid., p. 69.)

The most ominous of all negative results of globalization is a so-called "free-marked fundamentalism". It insists that all attempts to control and regulate the market have negative results as they reduce the accumulation of profit from capital and obstruct the growth rate.

The only force that is capable to defend the tolerable limits of globalization homogeneity and prevent a social and political backlash, is a nation-state, alone or in a group with other states. It is not by chance that neoliberal ideology often proclaims that states with its governments are impotent in the affairs of the management of the economy and control of markets.

If by the definition of neoliberal ideology such is the reality of globalization, than we may expect that in the XXI century the world may be destabilized to the point of anarchy. The elimination of the nation-state from international arena will lead to decline and fall of international law and the United Nations – a structure of peace and tolerance.

Another contradiction of globalization is its democratic deficit. It is well known that democracy requires government by members of political elite and the bureaucracy of the state who are accountable and removable through electoral process or decisions by the head of state. In the age of transnational politics democracy should be the touchstone of legitimacy.

The negative dimension of globalization, as we know it, is its secretive and uncontrollable nature. World Bank, International Monetary Fund look like closed clubs. This problem is acknowledged by many serious researchers.(Joseph S. Nye, Jr., Globalization’s Democratic Deficit, Foreign Affairs, July-August 2001, pp. 2-6.) But most of them speak mainly about making international institutions more transparent and accountable. They are against majority rule, insisting that in this case "one state, one vote" principle is not democratic, as well as "population size" principle. Firstly the "global village" would be ruled by small states, secondly by China and India. New democrats want the world to be ruled by "money" with the help of procedures that are like a fuse in the electrical chain. "Better the fuse blow than the house burn down".(Ibid., p. 4.)

Promotion of democracy in the framework of globalization means more than a need to increase transparency and improve accountability. Political and financial elite must think harder, much harder in order to promote ways and norms for global governance.(An example of such hard thinking is a book written by German journalists: Hans-Peter Martin, Herald Schumann, Die Globalisierungsfalle, Der Angriff auf Demokratien und Wohlstand, Rowohlt, 1996.)

The most obvious case for a change in assessment of globalization is in Africa.

Africa’s case

No other group of states has followed the rules of globalization so closely as Africa. The economic and social strategy of African countries was and still is formed with a strong participation of IMF and World Bank. Many African governments had obediently followed the advice from outside. The code of "structural adaptation" rules was and still is quite simple. The Institute for African Studies of the Russian Academy of sciences formulated them as follows:

minimize the state’s interference in the economy;

considerably reduce the trade barriers and make the local producers compete with foreigners at par;

curtail or cancel subsidies and price control;

retrench budget expenditures;

lift the limitations imposed on capital movement;

privatize state enterprises;

lift the limitations imposed on foreign private investments, adopting the laws aimed at encouraging them.(Alexei Vassiliev, Africa: a Stepchild of Globalization, Report at the 8th Conference of Africanists (Moscow, 28–30 September, 1999), p. 9.)

Most African countries followed these rules. They saw these measures as the way to the improvement of the economic development and quality of people’s life. But the results of the implementation of the "structural adaptation" were poor. In fact, they were better in the countries not covered by neoliberal programs.

The results of IMF's economic and financial policy in Africa were summed up in its report. The annual per capita GDP growth in the states covered by its programs was 0% and in those not covered 1%. The increase in national saving was 10 and 17% respectively and the share of their export spent for debt servicing was 26 and 16%.

The result of neoliberal reforms was the increase in the export of raw materials and semi-finished goods the economy of the West needed, foreign debt servicing and import of consumer goods to Africa. IMF people usually try to explain this situation simply by stating: the plans were correct but the African’s performance in their realization was poor.

Only one example of such an approach. Mr. M.A. Thomas, an Associate Director of the Center for Institutional Reform, writes in the most influential American political journal: "Still the debt crisis might have been avoided if not for the bad economic policies and poor governance of many HIPCs. Many of them maintained money-losing public enterprises, created government posts to provide employment, imposed artificially high exchange rates and formidable trade barriers and unduly concentrated on the production of just a few commodities. Many HIPC governments, moreover, have been riddled with corruption".(Foreign Affairs, September/October 2001, p. 37.) To support his view Mr. Thomas introduces several solid facts on ex-President Mobutu Sese Seko, Uganda, how "healthcare workers were stealing and selling 78% of drug supplies for their personal profit…".(Ibid., p. 38.) Developing countries are accused of "breaking all the rules" of good budget execution, violation of the rules of public contracting and human-resource management, the practice of "ghost workers" and many other sins.

Government officials, police forces, legislatures are accused of incompetence. "In many HIPCs illegality permeates the highest level of government, – notes Mr. Thomas, – implicating presidents, ministers, legislators, and supreme court justices. These officials fill posts with cronies and pressure them to grant personal favors and remit money (often collected through bribes and embezzlement). This top-down pressure for illegal activity trickles down to all levels of government creating hierarchies of wrongdoing".(Ibid., p. 41.)

The above-mentioned fabric of accusations, in my opinion, is a delusion. Corruption may be found in many countries including Russia, Europe and USA. But it does not explain the state of their economies. There are other, fundamental factors that influence multi-sector economies both of rich and poor countries. Transparencies, incompetence, strategies of development are important but they are not decisive for the state of economy.

For developing countries the most important levers to overcome backwardness are: stable society, a strong state, healthy employment, viable minimum wages and state employees salaries, market forces to a certain extent limited by control from central banks, support of export-oriented industries and small business, international aid, loans for development.

Of special importance is the role of a state. Institute for African Studies of Russian Academy of Sciences recently came to the conclusion that the state in Africa as a managing center and as one of investors is the force that is able to:

act as a partner in the relations with the managing centers of the world economy;

protect national capital by measures of the economic policy from its suppression by the more powerful transnational capital and resist monopolization of the national market by TNCs (transnational corporations) and TNBs (transnational banks);

ensure the necessary balance between solution of the problems of economic and social development including perfection of the human factor (this function is performed by the state in the developed countries of the West too).(Africa in a Changing World. The Seventh All-Russia Conference of Africanists, Moscow, 1998, p. 32.)

Africa consists mainly of agricultural societies. What is to be done for its peasants? Can they compete with American or French farmers who get from their governments direct and indirect subsidies and privileges.

The logic of unchecked free competition may lead to suffocation of African agriculture. Already wheat production is becoming unprofitable almost everywhere in Africa. Rice import from Asia ruins local rice producers. It is more profitable to produce coconuts or cocoa in Nigeria, Ghana or Cote d’Ivore than to grow manioc there. The influence of globalization on prices of seed, fertilizers and fuel rises the prices on the local markets and ruins peasants.

In Africa there are exceptions in the struggle with poverty. In 1997 15 countries demonstrated an annual increase of GDP. Still, the problem of oil prices negatively effects the conditions of local business activities.

The key to success in overcoming injustices of unfair world prices, dictated by faceless forces of profit, are social programs. The quality of human capital improves with the development of education and health care, improvement of the life standards.

For Africa strong states are a must. Political leadership and administrative agencies must strive to find support of their actions among citizens. When necessary, food prices should be subsidized. Only a stable society can attract direct foreign capital and professional skills.

The key to success in developing world is to end bullying or wrong policies by the institutions of global power. The poor understand their complicated problems better then anybody else. The advice from outside should be considered with all attention but to achieve their own development the people of Africa are to insist in favor of peaceful global order.

Justice is what Africa needs, first of all justice that will take into account history and the experience of the XXth century. Investments can bring growth and spread wealth and at the same time they may threaten human rights and social cohesion, cultural integrity.

While subjecting international community of the poor to neoliberal model of globalization it is important to remember the following. Today 41 of the world’s poorest countries are bankrupt. At the same time they owe some 170 billion US dollars to foreign creditors. Half of their 600 million people live on less than 1 US dollar a day. 2.8 billion people live on less than 2 US dollars a day.(Foreign Affairs, September–October 2001, p. 36; Choices, The human development magazine, December 2000, p. 14.)

Secretary-General of the United Nations Kofi A. Annan, at the opening address at the Millennium Summit, said: "In an age when human beings have learnt the code of human life, and can transmit their knowledge in seconds from one continent to another, no mother in the world can understand why her child should be left to die of malnutrition or preventable disease".(Ibid., p. 2.)

To overcome this tragic situation science is to provide to the governments hard facts on which real choices are constructed. It is knowledge that provides the base of good governance.

Globalization is a reality that was with us for the whole of the XXth century. It should not become a prologue to the coming anarchy.(Robert D. Kaplan. The Coming Anarchy, Vintage books, 2000.) The world today, most of all developing countries, can find healthy compromise of such realities as globalization and minimal global security to support healthy stable societies. For poor countries it is a matter of life and death.

The United Nations system, the World Bank and international financial institutions and development agencies are uniquely positioned to develop partnership to fight poverty. Stable legitimate governments and local societies protect national interests. In fact, the United Nations consist of states not brokers. The demise of nation-states may lead to the demise of the United Nations and unpredictability if not complete chaos in international relations. The respect of law means the respect of international law. One may doubt such a conclusion but it is unwise to push it aside completely.

Poverty is not just a peril to poor countries but a threat to the international system itself. Globalization is a big challenge to humanity. It needs sound policies.

On 16 September 2001 The Observer, 5 days after the criminal attack against USA, stated: "… it is justice, not war, that we should seek as we strive to come to terms with some of the most horrifying episodes that many of us will witness in our lifetimes… the US is often perceived as promoting a fundamentalist view of the moral primacy of individual liberty and free markets while being careless of colossal and growing inequalities between the developed and undeveloped world that they bring in their wake".(The Observer, 16 September 2001, p. 24.) This wish for reason and compromise is also addressed to other nations.

Globalization is under stress. There exist symptoms that challenge orthodox approaches.