Globalisation to Glocalisation
Critics of globalisation who had
been in retreat after the events of September 11, 2001, have now received
a renewed shot in the arm. Joseph Stiglitz’s Globalisation and its Discontents
is attracting bouquets although it is also receiving brickbats. And
why not? After all, Stiglitz was one of a trio who were awarded the
Nobel Prize in Economics last year. He has occupied key positions at
the Clinton White House and the World Bank. Incidentally, three noted
Indian economists been particularly close to Stiglitz. These are Partha
Dasgupta of Cambridge recently knighted, Raaj Sah once at the Planning
Commission and now at the University of Chicago and Mrinal Datta Chaudhuri,
a legend at the Delhi School of Economics for decades.
In reality, Stiglitz’s book is not an assault on globalisation. Instead,
it is an attack on the International Monetary Fund (IMF) for the growth-contracting
policies it has foisted in South America, Africa and most recently in
East Asia. It is an indictment of the US Treasury for impoverishing
Russia in the 1990s. There are no heroes in this critique except Stiglitz
himself and two countries–China and Malaysia. There is no argument
on China but the verdict on the impact of capital controls on Malaysia’s
economic recovery in 1998 remains controversial. The criticism of the
IMF, particularly its fetish for cutting public expenditure in times
of acute social crisis, is not entirely misplaced but when currencies
values are falling sharply and when there is massive capital flight,
there is really no short-term alternative to jacking up interest rates.
Stiglitz mentions India only in passing as a country that, like China,
escaped the ravages of the global economic crisis in the 1990s. He forgets
to highlight India as a success story of steady, robust growth. It was
bailed out by the IMF in 1981 and 1991. In 1981, its response was an
inward-looking adjustment that proved successful for a while but ultimately
resulted in a economic collapse by the end of the decade. In 1991, the
response was outward-looking with a home-grown globalisation strategy
that has made the economy vastly more resilient. True, we are not a
China, especially in foreign trade and investment. But that is entirely
because of ourselves–poor infrastructure, rigid labour laws and small-scale
reservation have prevented India from emerging as a world-leader in
labour-intensive mass manufacturing. Even so, globalisation has strengthened
India immeasurably reflected, for instance, in the inexorable rise in
foreign exchange reserves that amounted to $ 60 billion at last count.
Stiglitz does not deny that the removal of barriers to free trade and
the closer integration of world economies can be a force for universal
good. This is an important concession coming from such an influential
voice in the West whose globalisation-fatigue poses a greater threat
to the world than globalisation fears in countries like India. He argues
there has to be radical redesign of the IMF, the World Bank and the
WTO. Some steps have, in fact, been taken. Last year, the IMF set up
an Independent Evaluation Office to conduct post-mortems on its lending
programmes. This office headed by India’s former Finance Secretary Montek
Ahluwalia is expected to release the first set of its findings later
next month. Just three weeks back, the IMF put together a $ 30 billion
rescue package for Brazil that was unusual in that it lacked the sweeping
“conditionalities” that are usually associated with such IMF bailouts
and that Stiglitz criticises. And there is talk about a new system for
the orderly restructuring of external debts incurred by governments.
Clearly, as Stiglitz says, there has to be a new approach to the governance
of globalisation. India must take a leadership role here. But this has
to be done skillfully, not in the way we handled ourselves-in a paroxysm
of Maranger as it were–at the Doha meeting of the WTO last November.
