D

a assazzar

GLOBALISATION:
HISTORICAL BACKGROUND, MEANING,
NATURE AND EVALUATION

Globalisation has been in the air. It has now come to be of the most
terms in Politics andEconomics. It is being projected as the
one
frequentlyused
common objective of the whole
humankind.

Globalisation: Historical Background

The progress of industrial resolution is the 20th century was acompanied by a.
replacement of the police state by a welfare state. The state came to be an active actor in the
economic life of the society. In the socialist states, state ownership of means of production
and distribution became the rule and state controlled command economies were
operationalised and regarded as the best means for rapid socio-economic development. In
many other countries, nationalisation of key industries and enterprises was undertaken with a
view to provide goods and services to the people. State
began performing several socio-
economic functions. In India, the decision to adopt a mixed economic model was taken and
ownership and control over key industries was entrusted to the public sector. Even insurance
and banking were nationalised for securing a better mobilisation of
resources, and
consequcently for rendering better services to the people. State regulation of economy and
industry was practised and the public sector was patronised by the state as the secior
committed to provide essential goods and services to the
public. The state, acting in the name
of checking monopolies, undue concentration of wealth in
some hands and economic
inequalities, fomulated and enforced strict regulation and control systems.
However, the experience with the working of common economies and mixed economic
model, with a distinct leaning in favour of public sector was found to be inadequate slow and
unproductive of desired results. Around 1985, Indian economy began showing big strains.
Indian public sector now appeared to be a liability and foreign exchange reserves came to be
in very bad shape. Industrial growth became regressive and inflation was assuming alarming
proportions.
Around this time the world was heading for several big changes. The socialist economies,
 GLOBALISATION: HISTORICAL BACKGROUND, MEANING, NATURE AND EVALUATION 573

in particular, the Soviet

economy and political system, was collapsing. Even Perestroika and
Glasnost could not save the USSR. It
collapsed as a state. The
economic model became fully clear. All the socialist countries weaknesses
of the socialist
of Europe began witnessing a
process of overthrow of socialist systems. Liberalisation of
politics and economy came to be*
recognised as the necessity of the day. All countries of the world
the market began realising the merits of
economy, free trade, privatisation, liberalisation,
trade, industry and business. delicensing and deregulation of
In
July 1991 the Government of India decided to
new economic policy was formulated and go in for liberalisation of economy. A
economic reforms. These were implemented with an emphasis new
upon
market economy, free trade, govemed by the principles of
liberalisation, privatisation,
deregulation and
initiating the process of liberalisation and delicensing. These reforms paved the way for
developing as an outwardly opening economy, globalisation of Indian economy. It began
with the aim of
unifying domestic economy with world linking, integrating and
states. economy. Similar changes were
adopted by
other
WHAT IS GLOBALISATION?
The term 'Globalisation' has been derived from the word
emergence ofinternational network of economic
an 'globalise' which means the
becoming popular in 1980s when Economist Theodore system. Concept of Globalisation
was entitled: Levitt wrote an Article in 1983 began
'Globalisation of Markets' which
In 1992 Profession
Roland Robertson
compression of the world and the intensification (Sociologist) defined Globalisation as "a
whole. of the consciousness of the
world as a
A very major theme of Globalisation has been
Economic Glóbalisation which stands for
increasing economic interdependence of national economies
increase in cross border movement across the world
of goods, services, through a rapid
increasing economic interdependence the
technology and
capital involving
to the among
people and markets of all countries leading
emergence of a
global market place
Organization (WTO) has been acting as an instrument
a
single world market. World Trade
or

members of the world community of for unifying the economies of

nations. Market Economy, Free Trade, Economic
Integration, Economic Interdependences and Linkages among
Services, Kknowledge, Technology and Markets, Free Flow of Goods,
principles of Globalisation. Capital across all borders
constitute the central
"Globalisation represents the desire to move from national to
a global
economic and political
activity". It seeks to transform the existing international sphere of
system into a unified system of global economics. In the economic
are the existing system, national economies
mjor players. In the new system, the globalised economic and
ensure sustainable political activity will
development for the whole world.
Some Popular Definitions of Globalisation
"Globalisation is both an active process of corporate
of cross expansion
border facilities and economic linkages that has been
across borders and a structure
steadily growing and changing."
-Edward S.Herman
574 GLOBALISATION: HISTORICAL BACKGROUND, MEANING, NATURE AND EVALUATION

PGlobelisation ts the process whereby social relations acquire relatively distance-less and
Baylis and Smith
borderless qualities"
Globalisation can be defined as the intensification of world wide social relations which link
distant-localities in such a way that local happenings are shaped by events occurinn many miles
away and viceversa. Gladdens
Globalisation is seen as a conscious and active process of expanding business and trade

across the borders of all the states. It stands

for expanding cross-border facilities and
of economic
economic linkages. This is to be done with a view to secure an integration
interests and activities of the people living in all parts of the world. The objective of making
governs the on-
the world a truly inter-related and inter-dependent, developed global village,
going process of globalisation.
and cultural
Globalisation is the concept of securing real social economic, political
considered to be the essential
transformation of the world into a real global community. It is
means for securing sustainable development
of
of all the people the world.

NATURE OF GLOBALISATIONi
Salient Features of Globalisation:
1. Liberalisation. It stands for the freedom of the entrepreneurs to establish any
their own countries or abroad.
industry or trade or business venture, within
the nations. Each
2. Free trade. It stands for free flow of trade relations among all
status to other states and keeps its
state grants MFN (most favoured nation)
business and trade away from excessive and hard regulatory and protective regimes.
3. Globalisation of Economic Activity. Economic activities are be governed both by
It stands for the process of
the domestic market and also the world market.
the domestic economy with world economies.
integrating
4. Liberalisation of Import-Export System. It stands for liberating the import-export
across borders.
activity and securing a free flow of goods and services
of means of production and
5. Privatisation. Keeping the state away from ownership
distribution and letting the free flow of industrial, trade and economic activity

across borders.
collaborations among the
6. Increased Collaborations. Encouraging the process of
and
entrepreneurs with a view to secure rapid modemisation, development
technological advancement.
7. Economic Reforms. Encouraging fiscal and financial reforms with a view to give

strength to free enterprise, and market forces.

world trade, free
social economic, political and
As such, Globalisation is the concept of securing real
is considered to be the
cultural transformation of the world into a real global community. It
essential means for securing sustainable development of all the people of the world.
In order to be more cleat about the nature of Globalisation let us understand the
difference between it and Internationalism.
 GLOBALISATION: HISTORICAL BACKGROUND, MEANING, NATUREAND EVALUATION 575

DIFFERENCE BETWEEN GLOBALISATION

AND INTERNATIONALISM
Till very recently, we have been frequently using the term internationalism to refer to the
process of increasing connections and relations among nations. It denotes the concept of
increasing social economic, cultural and political cooperation among nations. Now instead of
advocating internationalism, we have started advocating globalisation which refers toa
broader and integrated process of transformation of the world into a global village
characterised by free world trade, freedom of access to world markets and increased social,
economic, and cultural linkages and relations among the people of the world.
Whereas internationalism stands for increasing scope and intensity of cooperation among
nations, globalisation refers to a free and integrated world system. Globalisation is neither a
purely economic process nor is related to communications only. It is a broad process of
increasing socio-economic-industrial-trade-cultural relations among the people living in all
parts of the globe. It refers to the process which is considered essential for transforming the
world into an inter-related and inter-dependent global village. It is aimed at securing the
benefits of free trade, open access to markets and equal participation in securing sustainable
development for all the people. It involves the attempts aimed at the development of rules and
procedures for making and enforcing all decisions required for securing globalisation.
In simple words, the aim of globalisation is to secure socio- economic integration and
development of all the people of the world through a free flow of goods, services,
information, knowledge and personnel across all borders.

ARGUMENTS FOR AND AGAINST GLOBALISATION

A Arguments of Critics against Globalisatlon
The critics criticise globalisation as the corporateagenda the agenda ofthe big business
and the ideologythe developed countries to dominate and control the intemational economic
system in a bigger, deeper and more subtle and intensive manner.
1. Gains of Globalisation for Rich at the Cost of Poor. Under the process of
Globalisation, big business has done well despite the slackened productivity growth.
Globalisation has helped the corporate elites to keep wages down, to skim offa large fraction
of the reduced productivity gains, thereby permitting elite incomes and stock market valuest
rise rapidly. As against it for the majority ofcountries, globalisation has not been productive
of good and beneficial results. Income inequality has been rising markedly both within and
between countries. The gap in incomes betweenthe 20 per cent of the world's population in
the richest and the poorest countries grew from 30 to in 1960 to 82 to in 1995, and the Third
World countries suffered deterioration in several aspects. Per capita incomes fell in more than
70 countries over the past 20 years; some 3 billion peoplehalf of the world's population,
continued to live on under two dollars a day; and 800 million continued to suffer from
malnutrition. In the Third World, unemployment and underemployment remain rampant,
75 million people a
massive poverty exists side-by- side with growing elite affluence, and
or employment in the North, as the
Third World
year or more have been seeking asylum
allow virtually unrestricted capital flight and seek no options but to attract
governments
576 GLOBALISATION: HISTORICAL BACKGROUND, MEANING, NATURE AND EVALUATIONN
witnessed trend towards
investment. Even the economies of the USA and Japan a
foreign
recession in the post-September 2001 months.
2. Source of Repeated Economic Crises. The
new
global order has been experiencing
increased financial volatility, and from the Third
World debt crisis of the early 1980s to the
crisis
East Asian debacle of the 1990s, financial
Mexican breakdown of 1994-95 to the South and
and extensive. With increasing privatisation
have become more and more theratening of
forces and that
the power of unregulated financial
deregulation, the discrepancy between and the potential for a global
governments and regulatory bodies has been increasing
breakdown has been steadily enlarging.
of the Rich. The critics of Globalisation even
Globalisation as an Imposed Decision
3.
choice of the
it as an imposed decision and not a democratic
go to the extent of describing and tactics
been business driven, by business strategies
people of the world. The process has incremental policy actions, and by larger
and for business ends. Governments have helped, by
debates and discussions of where the
actions that often taken in secret, without national
were
In the case of some major actions
entire process of globalisation w a s taking the community.
Free Trade
like passing of the North American
advancing the globalisation process, Union (EMU), policies were
Agreement (NAFTA) or joining the European Monetary
the interested business-media elites. In the
subjected to massive propaganda campaigns by against NAFTA even after
United States, public opinion polls showed the general public
mass media supported it, and it was passed: In Europe as well,
incessant propaganda, but the been opposed to the introduction of the Euro,
polls have shown that persistent majorities have
but apowerful elite supports it, so it moves forward.
carried out within a
4. Unequal distribution of Benefits. This undemocratic process,
of benefits and costs of
democratic facade, has been inconsistent with the distribution
as a tool designed to
globalisation. The fact has been that globalisation has been working
serve elite interests. Globalisation has also steadily
weakened democracy, partly as a result of
labour costs and scaling down of
unplanned effects, and partly because of the containment of
the welfare state which enabled the business minority to establish firm control of the state and
reduce its capacity to respond to the demands of the majority.
5. Strengthened Role of MNCs. Under the goals of globalisation, the business
effort to
community, particularly the MNC brotherhood, has also mounted a powerful
dominate governments either by capture or by limiting their ability to serve ordinary
citizens. By enlarging business profits and weakening labour, globalisation has shifted the
balance of power further towards business. The political parties in all countries have been
getting decisively influenced by business money in elections.
6. Private Profits at the cost of Social Security. The efforts of the corporate elite as
aided and validated by international financial institutions and by media support, have been
to the
regularly causing social democrats and social activists to retreat to policies acceptable
dominant business elite. Thus, in almost all the countries, even the democratic parties, more
the social democratic
particularly partieshave been accepting neo-liberalism, despite the
opposed preferences of great majorities of their voting constituencies. Democracy no longer
able to serve ordinary citizens, making elections meaningless and democracy empty of
 GLOBALISATION: HISTORICAL BACKGROUND, MEANING, NATURE AND EVALUATION 577

substance. The fall in voter turnouts in various democracies reflects the growing alienation of
the masses from the political process.
7. Increased Protectionism and Neo-colonialism. The business elites of variousstates
have all also been trying to push for such international agreements, and policy actions by the
IMF and World Bank, that can enhance the ability of democratic polities to act on their
behalf for securing their interests. In place of traditional protection on the part of the rich and
developed countries, globalisation has been giving birth to a new system of MNC
protectionism, which is doubly injurious to the economies of all the countries, particularly of
the Third World countries
8. Unduly Increased Role of Big Business. Most of the agreements and demands of the
international financial institutions are invariably tuned to the policies desired by the corporate
elite. The conditions laid down by them often gives primacy to budget constraint, the
inflation control, in line with the neo-liberal and corporate agenda. GATT, the WTO, and the
NAFTA. also give top priority to corporate investor and intellectual property rights, to which
all other considerations must give way. In the early 1980s, the IMF and World Bank took
advantage of the Third world debt crisis and used their leverage with numerous distressed
Third world borrover countries to agree to give first
priority to external debt repayment,
private as well as government. It compelled them to adopt austerity programmes of tight
money. and budget cutbacks focusing heavily on social expenditures affecting the poor and
ordinary citizens. It forced a stress on exports, which was to help generate forcign exchange
to allow debt repayment and was to more closely integrate the borrower's economy with the
global system. It stressed privatisation, allegedly in the interest of efficiency, but serving both
to help balance the budget without tax increases and to provide openings for investment in the
troubled economies. The IMF has been doing the same in Asia.
Working against Democratie Right of the Ordinary Citizens. Further, the IMF-
9.
world Bank actions are often a source of denial of democratic rights to non-corporate citizens
and elected governments. These are
mostly subordinated to the rights of corporate
investorsthe superior class of global citizens with priority over all others and beneficiaries
of the new MNC Protectionism. In the NAFTA agreement, governments were denied in
advance the right to take on new functions; any not asserted functions left to the
sector and to the superior class of citizens. In these agreements also, and eevn more
private
aggressively in the Multilateral Agreement on lnvestment, the global MNCs have little
responsibilities and virtually no responsibility can be imposed on them. They can fire people,
abandon communities, fatally damage the environment, push local companies out of business,
and purvey cultural trash at their full discretion. They can sue governments, and
disagreements are to be settled by unelected panels outside the control óf democratic
governments.
Globalisation so far has been a Productivity Failure, a Social Disaster anda
Threat to Stability
The claim of its proponents that free trade is the route to economic growth, is also refuted
by our experience so far. No country, past or present, has taken off into sustained economic
growth and moved from economic backwardness to modernity without large-scale
 NATURE AND EVALUATION
578 GLOBALISATION : HISTORICAL BACKGROUND, MEANING,
and other modes of insulation
government protection and subsidisation of infant industries
Great Britain, the United States, Japan,
from domination by powerful outsiders. This includes
were highly protectionist
in the erlier takeoff
Germany, South Korea and Taiwan. All of these behalf of the
and institutions bargaining on
phases of their growth process. The governments
WTO and NAFTA, have been able to
remove
MNCs today, through the IMF, World Bank, extensive
countries. This threatens them with
these modes of protection from less developed "branch
into foreign economic systems as
takeovers from abroad, thorough going integration
and underdevelopment, and most
plant economies" preservation in a state dependence
of
from the ravages of neo-liberal top-down
particularly, an inability to protect their majorities
development.
the critics project a formidable case against
On the basis of all these arguments,
globalisation.
(B) View of the Supporters
some of its current and possible
The supporters of Globalisation, even while admitting
It is a natural extension of the prevailing
bad effects, argue that it is an imperative necessity.
and continuously increasing global interdependence.
infant stage of Globalisation. Presently,
1. The problems being faced today are due to
to be threatening the
Globalisation appears to be threatening global independence. It appears
such crisis as the currency crisis of South
sovereign nation- state system, acting as a source of social costs having the potential to
East Asian states in 1997, and as a process involving steep
threaten the economies of various countries. During the past two decades division of
economic growth, particularly created through globalisation, ha? heen a source of increasing
these have resulted due
inequalities between the rich and low income countries. Nevertheiess,
to the developing nature of the process of globalisation. Once the process becomes really
global and extensive, it will be a source of sustainable development for the world at large.
2. Inevitability of Globalisation. Globalisation, the supporters argue, is inevitable. It is
the only way and it alone has the potential to attain sustainable development. It is governable
and it can be made more and more effective through an increase in global level understanding
and efforts.
3. Globalisation is essential under WTO. Even before the World War I, several
institutions and supra national organisations were created for guiding and regulating
international economic relations. Later on, the Intenational Monetary Fund (IME) and the
World Bank (WB) were designed to act as structures to manage the finances in a new
international political economy, and were part of a new intemational order together with the
regimes of the General Agreement on Tariffs and Trade (GATT) and the United Nations.
GATT promoted standards for tariffs and then tariff cuts, and then tumed into the World
Trade Organisation (WTO) at the Uruguay Round in 1995, thereby also taking a broader role
in shaping much of the international trade agenda. WTO can, therefore, be seen as an
instrument of globalisation, as it surely pushes for free trade and discourages protectionism.
4. Defects of Globalisation products of selfishness of some States. The problems
resulting from the WTO and Globalisation have been the result of certain lapses and attempts
being made by some developed countries to hijack WTO and Globalisation in their favour.
 GLOBALISATION: HISTORICAL BACKGROUND, MEANING, NATURE AND EVALUATION 579

The new global economic regime is still in its childhood. When it becomes mature and fuly
developed, it would become a real source of prosperity and development for all.
5. Globalisation is Governable and Dependable. What is needed is to check parochia
designs and efforts of vested interests through conceted global level campaigns.
Globalisation is governable, either through direct conduction and promotion of free trade
policies and deregulation or through pressure on the majority world from economically
powerful hegemony and supra-national organisations and institutions such as the IMF, the
World Bank and the OECD. Although the creation of regimes of international co-operation is
an inevitable consequence of natural disasters, need for economic growth for regionalisation,
formal and informal structures do exist at various levels for globalisation to develop
Globalisation is already on. It has to be recognised as a natural and helpful part of
contemporary international relations.
However, Globalisation has certain potential dangers as through it the corporate elite, and
the MNCs, the Developed West can attempt to strength further their current domination of the
international system. The need is to check these and not to eliminate Globalisation. The need
is to be prepared to create new structures of global governance, a new international economic
regime for regulatng globalisation and for reversing some of its fatal social, environmental
economic and cultural effects on the states organisations and individuals. What is needed is
not to end globalisation but to amend it for making it enduringly productive of desired results.
It is also necessary to protect the WTO from being hijacked by the developed countries.
In February 2001, the Tata Energy Research institute organised the first sustainable
development summit in New Delhi. It was attended environmentalists from all parts of the
world. It fully endorsed thie call for adopting and pursuing the gave of sustainable
development. Globalisation can, help the human level to pursue the goal of sustainable
development in an effective and desired way.
GLOBALISATION & STATE SOVEREIGNTY
The emergence and success of regional economic associations/unions, and the on-going
process of globalisation have together been a source of change, in the concept of state
sovereignty. Further, the presence of neo-colonialism in which the developing countries,
despite being fully sovereign states, find themselves living under the economic, ideological
and cultural control of the developed countries, has also been a source of limitation on the
sovereignty of the state. Increasing global interdependence, neo-colonialism, globalisation
and liberalisation-privatisation have been together acting as a source of big limitation on
sovereignty.
During the 20th century the emergence of welfare state and the popularity ofthe socialist
model of economic development acted as inputs for a big increase in the functions of the
state. The state began using its sovereignty for becoming an owner of industries and a strong
regulator and determinator of the economic life of the society. Consequently, it began
wielding a large amount of power over the socio-economic life of the people.
However, the last decade of the 20th century witnessed the liquidation of the socialist
economic model and the consequent emergence of a strong wave of politico-economic
liberalisation of economy and politics in all the states, Globalisation emerged in the sphere of
580 GLOBALISATION: HISTORICAL BACKGROUND, MEANING, NATURE AND EVALUATION

the traditional concept of

international economic and trade relations, and it began replacing
economic sphere began declining.
internationalism. The role and functions of the state in the
conditions for human welfare continued to
While its role as a protector and promoters of
the role of an-
functions began undergoing a change from
operate as before, its economic economic life.
coordinator and supervisor of the
owner and regulator to a role of facilitator,

Practical Limitations on Sovereignty of the State

Factors Placing some
and march of the
Economic Relations. The acceptance
1. Lessened Role of State in on the role of the
of liberalisation-privatisation has acted as a source of limitation
process the desired goods and
state in the economic sphere. The
failure of the public sector to deliver
of
of the state to organise and manage production
services, the decline of faith in the ability functions of
led to a decline is the economic
goods and services for the people have together
the state..
Decisions for Member States. The emergence
Regional Functionalism and Binding
2. international economic
multinational corporations and
of free trade, market competition, ASEAN and others,
like European Union, NAFTA, APEC,
organisations and trading blocs in the sphere of international
have limited the scope of the operations
of state sovereignty
for example, have to abide by
economic relations.The member states of the European Union,
the rules and policies made by this organisation.
international
of Decisions of International
Instructions. Increasing
3Limitations
limitations on its external sovereignty.
inter-dependence has compelled the state to accept the
the rules of international economic system,
Each state now finds it essential to accept
WTO, the World Bank and the IMMF. and
Movements. Globalisation has encouraged
4. Emergence of Global People of the
socio-economic cultural relations among
all the people
expanded people-to-people communications have
means of transport and
world. 1T revolution and development of fast
Global Community which, now appears to be
been together making the world a real
of each state now deal with people of other
developing towards a global village. The people
states as members of the World Community.
The loyalty towards their respective states
of their states which, they
continues, but now they do not hesitate to oppose those policies
feel, are not in tune with the demands of globalisation.
Even the movement for opposing
has tended to bring the people of world on one platform
and instill among them
globalisation
a feeling of community living at the global level.
5. Lessening Importance of Military Power. The state continues to maintain its military
of its national power. However, the strength being gained
power as an important dimension
coexistence as the way of life has tended to
by movement for international peace and peaceful
reduce the importance of military power of the state.
conventions and treaties have
6. Treaty Obligations of Each State. Several international
the rules and
placed some limitations upon all the states. All the states are todaymenace by
bound
The need to fight the of terrorism and
norms laid down by several such conventions.
well as the shared responsibilities to protect the environment
roguc nuclear proliferation as
and guarantee all human rights of all have compelled all the states to accept such rules and

regulations as are considered essential for the securing of these objectives.

GLOBALISATION: HISTORICAL BACKGROUND, MEANING, NATURE AND EVALUATION 581

Thus, Globalisation and several other factors have been together responsible for putting
pressure on the sovereignty of the state. The role of the state in the economic relations has
undergone a big change. It has got reduced. The operation of the new international economic
system with globalisation as its objective has been further reducing the role of the state
sovereignty.
Several scholars hold that Globalisation has essentially limited the concept of state
sovereignty. While some ofthem, the 'die-hard pluralists aceptit as useful and ideal. some
others, the *die-hard nationalists regard it as an undesirable and harmful development.
Neither of these two views is however fully valid. State sovereignty continues to be intact in
its internal and external dimensions. The state continues to be sovereign state and its
sovereignty continues to be comprehensive, permanent and absolute. While its functions have
undergone a change, the world has now 193 sovereign independent and equal sovereign
nation-states People continue to live and enjoy their lives as citizens of their respective
states. The new needsTor global level economic and trade integration, protection of
environment, protection and security of alt human rights of all, the need to collectively fight
the menace of international terrorism and the need to fighta collective war against poverty,
hunger, disease and under- development have changedthe role of state in the 21st century.It
does not, however, mean either the end of sovereignty or a serious limitation on the
sovereignty of state.