A distinctive feature of political developments in recent years globally is the rise of populism and identity politics. This has also seen the rise of religious fundamentalism as part of identity politics, and populism has galvanised the extreme right political parties.
A parallel development that began in the early 1980s has been rapid globalisation. What distinguishes this current phase of globalisation is not just its speed, but the fact that it is led by corporate interests, which some termed "globalisation under hegemony".
One wonders whether there is a link between these two developments - globalisation at the behest of large multinational corporations (MNCs) and the rise of populism and identity politics. A number of factors establishes a causal link between the two. These can be explained under four headings: alienation; rising inequality; weakening of the State; and failure of the social democrats.
Alienation: The speed and extent of globalisation did not allow sufficient time for people to adjust to a new way of life. There is a relentless drive by MNCs to level local values - to marginalise local culture, to undermine social norms, to relegate local varieties and tastes- in order to create global values - to standardise products for a global consumer class. This is needed to expand market, and reduce cost in the face of increased competition.
Cost reduction and standardisation of products are aided by rapid technological advancement. The MNCs have split their production process and spread them in different parts of the world. It is now called "global value chain" (GVC). Developing countries are now competing with each other to get crumbs by offering the MNCs tax concessions, lax environmental regulations and a labour force who cannot organise to ask for better pay and working conditions or job security. Research shows that developing countries as a whole are net losers. The crumbs from GVC does not compensate for the revenue loss from tax concessions. The race to bottom with regard to environmental and labour standards further worsens developing nations' welfare.
By expanding the market and reducing the cost the MNCs are able to prevent falling rate of profit as predicted by Marx. As they accumulate super profit the share of wages in the national income has declined in almost every country, including in the developed capitalist world as MNCs kept moving the production of their standardised products offshore. Permanent full time jobs are replaced by part-time insecure casual workers, and work and pay conditions are cut as the power of labour unions are diminished.
As a matter of fact, the current MNC-led globalisation began in the early 1980s with Margaret Thatcher smashing the powerful coal miners' union in the UK and Reagan sacking en masse the striking air traffic controllers in the USA. The attack on workers continues in the name of making the labour market more flexible to suit the new kind of 7/24 work. The competition between workers in developing and developed countries is driving down wages and job security for workers in developed countries. They are held hostage to the possibility that business would close and leave, in order to find cheap labour in other parts of the world; they had to accept restraints on their salaries - or else, while businesses enjoy tax cuts and other benefits. As a result, the gap between executives' salaries and the wages of their average employees has been growing rapidly around the world.
Rising inequality: One of the consequences of these developments is the phenomenal rise in inequality. Research by Oxfam finds that the richest 1% have more wealth than the rest of the world's population combined. Global wealth inequality is worse than at any time since the 19th century. However, it is impossible to know how much the rich really have given that they hide so much of their wealth in tax havens and secrecy jurisdictions. Recent estimates suggest that up to $32 trillion is kept in tax havens - around one sixth of the world's total private wealth. If we take that into consideration, wealth inequality would look much, much worse.
A recent OECD report noting sharp increase in income inequality in the vast majority of countries from the 1980s observes that the sharp rise in income inequality across the world is one of the most worrying developments of the past 200 years. As for the OECD countries, it finds that income inequality is at the highest level for the past half century. The average income of the richest 10% of the population is about 9 times that of the poorest 10% across the OECD.
The IMF in its April 2017 World Economic Outlook reported that after being largely stable in many countries for decades, the share of national income paid to workers has been falling since the 1980s (see the figure attached here). According to the IMF, this trend is driven by rapid progress in technology and global integration.
Bangladesh and India are not exceptions. New research by French economists Lucas Chancel and Thomas Pikettyshows that India experienced one of the highest increases in top 1% income share concentration over the past 30 years. The share of national income captured by the richest 1% is now at 22%, while it was only 6% in the early 1980s. The New World Wealth data show that India is the second-most unequal country globally, with millionaires controlling 54% of its wealth. With a total individual wealth of $5,600 billion, it is among the 10 richest countries in the world - and yet the average Indian is relatively poor. A similar picture is also found in the latest Credit Suisse data that the richest 1% in India own 53% of the country's wealth - increased from 36.8% in 2000. At the other end of the pyramid, the poorer half jostles for a mere 4.1% of national wealth. India has only been really shining for the top 10% of the population - roughly 80 million people in 2014 - rather than the middle 40%.
According to the Asian Development Bank, Bangladesh is one of the 15 Asian countries, where inequality has increased significantly during the past three decades. According to a 2011 Report of the Unnayan Onneshan, the Gini coefficient, a common measure of inequality, stood at 0.458 in 2010, which is above the critical value of 0.4 - it was 0.36 in 1973-74. According to the World Bank, the share of the lowest 10% of the population (poorest) in the national income declined from 4.23% in 1984 to 3.99% in 2010, whereas during the same period, the income share of the top 10% (richest) rose from 21.87% to 27.03%.
Weakening of the State: Unfortunately, the governments' ability to support those who fell wayside, lost jobs and hence suffered health problem or struggled to meet ends became severely constrained as the State came under attack. Both Ronald Reagan and Margaret Thatcher believed State or government was the source of the problems and not solution. Thus, various social programmes, including social protection were cut.
At the same time governments around the world struggled to raise revenues when they were forced to cut tax for the business and the rich even though they are notorious for tax evasion by using creative accounting and facilities offered by tax havens. One 2016 IMF report found estimated $600 billion tax losses a year due to profit shifting by MNCs globally. The Tax Justice Network found a lower figure of around $500 billion a year global losses; but losses are found more intense in lower-income countries in relation to GDP and as a proportion of total tax revenues than the IMF report shows.
Failure of the social democrats: Unfortunately, the social democratic or left-wing progressive political parties failed to resist the attack on the State and the union was led by the conservative right-wing political parties. Tony Blair's or Bill Clinton's so called third-way was nothing but total capitulation to the corporate interest. They won the elections not by challenging the conservative agenda and MNC powers with real alternatives, but by promising to continue the agenda of privatisation, deregulation, trimming social programmes and globalisation - they became "true believers" more than the Pope!
Ironically, the economic and social agenda of liberalisation and privatisation was introduced in India by the Congress party. The BJP was unexpectedly booted out in the 2004 election as the common people were left out from its "shining India". However, to the disappointment of all, the Congress wanted to outperform BJP as a friend of elite and MNCs by having Manmohan Sing has Prime Minister, who earlier as Finance Minister in the Government of Narasimha Rao implemented IMF-dictated structural adjustment and liberalisation policies. During his two terms as Prime Minister India witnessed worsening disparity as he continued to open the economy to corporate interests. Why should anyone be surprised that voters are disillusioned fell for communal politics?
Summing up: The current phase of globalisation has heightened economic insecurity and caused social disintegration. Recall Margaret Thatcher's famous saying, "there's no such thing as society. There are individual men and women and …And people must look after themselves…" Worsened by the void created by the failure of the social democrats and weakened State capacity to protect the vulnerable, workers and common people feel abandoned and threatened by corporations' relentless pursuit of profit where greed is seen as good. They clamour to go back to the "root"; cling to the "old" values; seek security among those they can identify with. This a fertile ground for the rise of fundamentalism and extreme right-wing politics based on nationalism, race and religion. It is not too difficult to see parallels between some recent developments and the rise of Hitler or Mussolini - both came to power through popular supports.
Anis Chowdhury, Adjunct Professor, Western Sydney University and the University of New South Wales (Australia). He held senior United Nations positions during 2008-2016 at Bangkok and New York. He can be reached at [email protected]
© 2024 - All Rights with The Financial Express
