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 The masses have never been so ignorant as today. For while the media continues to portray and understand life and it's events in terms of the nation state, the real forces shaping our lives (such as the EU, the IMF, the World Bank, the UN and the G8) are working at a supranational level that leaves many of the decisions effecting our lives relatively untouched by national government policy. When our nations leaders talk about their country making progress, they are really talking about guiding their country through a game, the rules of which have been set by international bodies. In the next twenty years, 1.2 billion Third World workers, many of them earning less than £2 a day (less than £800 a year) are expected to be given the jobs traditionally done by people in the western world, the consequence being that wages in the traditional advanced countries are set to fall by as much as 50 per cent. This is one of a number of international phenomenon which nation states are currently powerless to fight against and in the next ten years as governments failure to secure employment the media and people will no doubt erroneously attribute this failure to their policies, when in fact such tends will have been driven by global forces that our nations politicians are presently looking up to in submissive and accepting bewilderment. Politicians will of course continue to engage in the mindless etiquette of embracing developmentalism (keeping social spending and taxes low in order to create a secure financial climate and attract foreign direct investment) in order to appear suitably qualified for the position of government. Maybe there is only one thing that can save us now, and that is Anke Hoogvelt's fascinating book, Globalisation and the Postcolonial World which knocks the spots of the developmentalist argument whilst providing an insight into how the organisation of capitalism has changed over the past thirty years. In Hoogvelt's opinion, capitalism has over the past thirty years, acquired various structural properties all of which are global in scope, and all of which suggest that capitalism is becoming and will become regulated not at a national level, but at an international level. Hoogvelt identifies three main emerging global structures of capitalism: a) the indebtedness of Third World states to the IMF and the World Bank which perpetuates a steady flow of power from the third world to creditor countries b) the new lean systems of production which allows the process of production to be situated anywhere around the world and c) the new intraglobal financial markets which have allowed investment into Third World countries to flow straight back into the secure financial markets of the western world and thus depriving the unstable markets of the Third World. These are discussed below.
According to Hoogvelt, one of they key ways in which capitalism has become a global phenomena is rapped up in the politics of third world debt. The seeds of third world debt were planted in the early 1970s during which time the nation states of the third world were keen to nationalise companies that were operating in their territory but owned by foreign companies. To do this they needed a source of cash, which at the time was only too readily available form western banks, who flush with cash from companies who had profited from the rise in oil prices, lent the governments all the money they wanted. In addition to this a lot of money was leant to private companies and individuals, many of whom were corrupt and channelled the money back into the core financial markets via personal overseas accounts. As a result a large amount of the money put into third world hands, was not invested in the economy, which played a big factor in the debt crisis in the 1980s. The debt crisis occurred when the third world states were no longer able to pay the interest on their debt. Where this happens, the debt is termed bad and is no longer considered an asset but a liability to the bank. So in a state of panic, the banks, through the help of the IMF and the World Bank agreed to reschedule the debts in the 1980s. The debts were still to be paid off to the western banks, but over a longer period and with a different kind of interest rate. The fixed low interest rate was changed to a floating interest rate which concurred with the interest rate of the country whose currency the debt was configured in. This proved disastrous for third world states as the interest rates of the debtor states (USA and Europe) soared in the 1980s, thus increasing the size of debt repayments that the third world had to pay (as interest rates went up - so did the interest the third world nations had to pay on their loans). The consequence has been that since 1983 the amount of money third world countries have paid out in debt service has constantly exceeded the money they have received as the result of investment and aid. And this hardship is in addition to the requirements of the IMF who rescheduled the debt of third world countries only on the condition that they switched from producing food for their people to cash crops for western markets. Thus as a consequence of corruption and structural readjustment, the third world has become slotted into the global economy in somewhat of a subordinated and disadvantaged position.
According to Hoogvelt, the development of another global strand of capitalism occurred concurrently as companies began the trend of shifting their production methods away from the inflexible and unresponsive nature of assembly lines, towards more flexible production methods that utilised technology in such a way to make production responsive to changes in the rate of demand and alterations in the type of product demanded. This shift was and is aided by advances in IT, telecommunications and transport which have allowed companies to locate the design, production and management functions in the most cost-effective areas of the globe. In fact some industries are now able to contract the entire production aspect of their operations to other companies in other countries. Thus production capacity (that is the ability to produce the good required) is now considered as a commodity (that is something that you can buy from someone else). This flexibility allows companies to move production capacity to those parts of the world where they can secure the lowest costs (pay the lowest wages, or exploit people the most - depending on how you look at it). So for example, Nike will design their trainers somewhere in Europe, have the materials made by some company in China, have the trainers put together by a Korean company in Seoul and hire other companies to transport, distribute and sell their product. And all this will be managed from an operations base somewhere in the US whose decisions are determined by feedback from shops on how well different products are selling. However, according to Hoogvelt, the important point to note about these systems is that they require huge investments in technology that can only be recouped by ensuring that the new product is sold all over the world (but most importantly in the world's three most wealthy markets - north America, EU and the Pacific Asia Region). As of yet, many businesses have been unable to operate in all three markets by themselves, and this has required the formation of strategic alliances between independent partners - what Hoogvelt calls virtual firms. These virtual firms are unique in that within their network, resources are allocated on the basis of trust and are not backed by national law or legal contracts. Hoogvelt believes that as these cross-border alliances develop their own rules of engagement, so, step by step, a global governance structure will emerge to cater for them.
The third major structural development which characterises the new form of capitalism, is according to Hoogvelt, the connecting up of the world's financial centres. This connecting up has transformed the world into one big whirlwind of loans, bond insurances, export and commercial credits, grants, derivatives, options and swaps. At the touch of a button money can now be transferred into all kinds of schemes over the planet. Money is taking on a new dimension altogether. A great example used by Hoogvelt was that banks can now pool together mortgages and loans, use as assets them (because of the potential cash that they generate) to secure bonds, which can then be sold to generate revenue.
However for Hoogvelt it was important for the reader to realise that the phenomenon of globalisation, is not really anything to do with an increase in the internationalisation of trade. Indeed, Hoogvelt used statistics to show that the intensity of international trade in the 1990s is no different to what it was in 1913. What is unique about capitalism of today, is that investments which in the past spanned the whole world are now becoming increasingly confined to a triad of core markets (EU, north America and South East Asia). This is partly due to the phenomenon of global financial deepening - which is when the growth of international financial transactions outpace the growth of underlying economic fundamentals such as trade, investment and output. In other words, the money to be made investing in the stock market is greater than the money to be made investing in industry and production. Now, whilst the financial markets are global, the majority of investments are kept within the core markets where investments are thought to be safe and secure. Thus rich people in the third world, instead of investing the money in either their countries industry or markets, prefer to invest it in the financial markets of the core. Another reason is that multinationals looking to invest not only need cheap labour, but they also need well trained labour who can handle technology, this again can only be found in the core markets. The outcome of this being that whereas before, direct investment went to all parts of the world, nowadays, only 28% of the world's population receives 95.1% of the FDI. According to Hoogvelt, this means that nearly two -thirds of the world is virtually written off the map as far as any benefits from this form of investment are concerned. The result is that today the world can be considered as split into two kinds of markets, the core markets consisting of the EU, NAFTA and South East Asia and the non-core markets which covers everywhere else. A second division is also possible. Within the populations of these core markets, approximately one third are the very rich, one third are competing with each other for the jobs that are going around, and another third are totally alienated from the process. Of those nations that aren't within the core markets, the division of the population is skewed so that a greater proportion lie in the outer two groups. There may be big fat profits to be made in Latin America, Africa and parts of Asia but the key point is that within these states there is a trend for investment to move to the core markets rather than their own backyards. And as a consequence, a large proportion of the populations of these excluded markets can be considered as excluded.
However the exceptional point about this book is not the commonplace bemoaning of how the western institutions have crippled many of the world's poorer nations and then leeched them of their resources, sweat and work. It is in the fact that the book attempts to ask the fascinating question as to what are those who are excluded from the capitalist system actually doing? The answer to this question as far as the UK is concerned is quite clear. Hoogvelt spends little time explaining that those who are excluded from the formal market economy, are forever taking the brunt of government programmes to squeeze them back into it (whether these be reduced social benefits in the case of the New Right or increased training opportunities in the case of New Labour). However, what is going on in other places is perhaps a little more interesting. Hoogvelt, chooses four areas which were previously under colonial control, and taking into account how they have interacted and responded with globalisation ascertains what she calls their 'postcolonial condition'. All in all she identified four conditions. That of exclusion and anarchy which has been commonplace to sub Saharan Africa, where ethnic conflicts and brutal murders can be traced back to the failure of colonial drawn boundaries to encompass coherent cultural identities, and the influence of the IMF in destroying social welfare and thus precipitating civil collapse and instability. That of spiritual renewal and enmity towards the west in Islamic states such as Iran. That of East Asia where state led developmentalist projects, assisted by American investment during the anti-Communist years allowed a small number of economies from this area to integrate and form the third market of the reconstructed global capitalist system. However, the most interesting postcolonial condition for Hoogvelt it seems, is the one that has arisen in Latin America where the excluding effects of globalisation have left open spaces for people to construct new ways of doing things, and provided social theorists with the impetus for finding out what Arturo Escobar called 'alternatives to development'. Says Hoogvelt, 'They can play with the tasks of articulating alternative productive strategies and rationalities - autonomous, culturally grounded, democratic and ecologically friendly - without having to worry overmuch about overthrowing or taming the global capitalist system, for the capitalist system is not anywhere near what they are playing at.' But what are these alternatives? Hoogvelt believes that anyone trying to answer this question would be disappointed by the paucity of literature. Hoogvelt herself cites community exchange systems, establishing working links between unmet wants and needs and unused resources, the development of 'twin' or 'parallel' economies in which circulation money is divorced from interest-bearing money, and where leakages between the formal and the informal economy are strictly controlled. Another crucial question for Hoogvelt is whether or not the efforts of the Latin American excluded, 'to stop being modern, dovetails with the containment policies of the global capitalist system' who ultimately retain the power. She adds that while in the past such experiments, have been quashed by the national state, acting on behalf of national capitalist interests, today, the national state, being more interested in assisting the internationalisation of domestic capital, may be pressured to leave well alone. Well who knows? For Hoogvelt, the future is open ended, which couldn't be more correct. What we have to realise, is that there is no determined pattern to history or the future. Each and every human is an unknown quantity, and as history and the world as we know it is, is constituted by unknown quantities, while trends may be identifiable in retrospect, the infinite multiplicity of unknown quantities circling around waiting to grab history and throw it into a completely new direction, can never be fully covered. Latin America then, and the growing number of so-called globally excluded the globe represent a large swathe of people, whose rejection from the capitalist developmentalist doctrine, has rendered them extremely vulnerable to other modes of thinking whether this be fascism, ecology, communism or ways of thinking yet unnamed.
MacMillan Press |
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