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EPW Perspectives May 5-11, 2001 EPW Index

Registered User
User Email Id A comprehensive
Political Dimensions of Globalisation subject and author
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for each year is
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The 1997 Copenhagen Seminar for Social Progress
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‘project’ is global capitalism, or the application of the Circulation
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countries, by the most powerful international Hitkari House, 284
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organisations and by the economic and financial elites Singh Road,
of the world” (1997 Copenhagen Seminar, Ministry of Mumbai-400001.
Foreign Affairs, Denmark, 1998). (Demand Drafts are
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global capitalism will tend to blur the distinction,

presenting the free circulation of goods, services, and
capital as a natural stage of historical evolution. On the
other hand, an opponent of global capitalism will be
inclined to play down the force of the trend and to
The Site emphasise the decisions taken by transnational
Sameeksha Trust corporations and governments favourable to global
Research markets. As the report says “This distinction, however,
is necessary to create space for human thinking and
action. Without it the ‘end of history’ would be
accompanied by the ‘end of politics’. There would be
only one polity, one form of political organisation best
serving the interests of global capitalism, and leaving
governments with little room for manoeuvre” (ibid). It
must however be added that the process is directed by
the project and made subservient to it.
Emergence of Global Market
Fellowships The emergence of a truly global market as the main
feature of globalisation began in the eighties dissolving
many of the boundaries between national financial
markets. This coincided with the collapse of socialist
governments of central and east Europe with their Macroeconomic Indicators
command economies and many interpreted these (14 May 2005)
events and shifts of that period as presaging the final
triumph of capitalism over all its rivals. Money Market Rates of
Under global capitalism the mobility of capital has
grown in scope, speed and volume. The result is
everywhere an increment in the social, economic and BOOK REVIEWS
political power of capital in relation to labour and states.
The new political setting demands a broad-scale review Dams and Resistance
of the contemporary nature of capitalism and in
particular the relation of state institutions to global and A `Prismatic` View of the
national structures. Tribal

It would be overly simplistic on Marxist lines to explain

the development of globalisation solely in terms of
capitalism. Technological innovations, the dynamics of
the states system, and certain features of modern Click Here for Weekly
culture have also contributed to the transcendence of Email Content Alert
borders in ways that are not reducible to capitalism.
That said, however, the pursuit of surplus accumulation
has provided a principal and powerful spur to
globalisation. To this extent Karl Marx has been borne

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out in his prescient observation, made in the 1850s at

the dawn of supra-territoriality, that ‘capital by its nature
drives beyond every spatial barrier’ to ‘conquer the
whole earth for its market’. Today in the words of the
secretary-general of UNCTAD, ‘producers and investors
increasingly behave as if the world economy consisted
of a single market and production area (UNCTAD Ninth
Session 1996).

With the transition from monopoly capitalism, the

emergence of global capitalism shifts the balance of
class forces toward capital and the result is the decline
in the relative autonomy of the state. The logical
implication is that important changes in the state will
occur when the underlying relations between and
among the classes are transformed. State policy and
political processes become responsive to newly
dominant class fractions – or new bases of unity among
them. Under global capitalism political change is
influenced by a new strategic aspect of the political
within the capitalist class [Ross 1995].

Some analysts see the global regulation and (1995)

restructuring of the interstate system under
globalisation as the new colonialism. Philip McMichael
argues that the world is on the threshold of a major
political transition in the political regulation of economic
activity, from a primarily national to a primarily global
form of regulation. Under the pressure of multilateral
agencies, global firms and global and regional free
trade agreements, nation states increasingly surrender
the organisational and ideological initiative to
transnational forces. In short nation states face a form
of colonisation distinct from previous forms [McMichael
1998]. Rather than the colonisation of territories and
peoples as in the past it is a colonisation of the
regulators of territories and peoples, viz, the nation

The UN has been restructured through the Bretton

Woods institutions. The Security Council has become
little more than an extension of western or rather US
foreign policy. But it is a foreign policy increasingly
fashioned to support a ‘global governance’ the main
objective of which is to ‘promote dynamic open free
markets’ for globalisation.

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In the last decade the US has intensified its use of the

Bretton Woods institutions (supposedly agencies of the
UN) as active enforcers of their policy. It has been
officially acknowledged that the US relies on the IMF,
the WB and regional development banks to further and
support its foreign policy goals. Joan E Spero,
undersecretary of state for economic and agricultural
affairs told the house committee on banking, financial
services, “The two premier global financial institutions,
located just blocks away from the White House are
virtually synonymous throughout the world with the US
power and influence. We must remember that what is at
stake here is not the existence of the international
financial institutions but American leadership in these
vital institutions which form an important pillar of our
influence in the world and our ability to direct their
efforts towards promoting the values and interests
which are important for us” (The Hindu, May 1, 1996).

The World Social Development was part of a process to

redefine and restructure the UN to suit the interests of
the west for globalisation. At Copenhagen the UN
legitimised the role usurped by the Bretton Woods
institutions thus giving up its own functions and powers
in the economic field mandated by the charter.

All institutions within the UN system oriented to the

concerns of the developing nations have been under
threat. The Centre for Transnational Corporations has
been abolished. It is argued that the UNCTAD is not
necessary now that the WTO has been established. It
now has ‘a visibly leaner organisational structure’ and
has become an active promoter of transnational

A new global constitutionalism has been brought in

mainly through the WTO. “We are no longer writing the
rules of interaction among separate national former
economies. We are writing the constitution of a single
world economy” (Renato Ruggerio, director general of
WTO). There is no reference to governments or people
here. The new constitutionalism is imposed through
binding multilateral instruments of the GATT, TRIPS
and TRIMS agreement that operate under the umbrella
of the WTO with their own enforcement mechanisms.

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Almost all contain a pre-commitment strategy that binds

present and future governments to certain
predetermined institutional forms and policies. They
confer privileged rights of citizenship on corporate
capital, while constraining the power of the nation state
and the democratic rights of its citizens.

Conflict with National Laws

What happens when this new ‘constitutionalism’ is in

conflict with national constitutions or laws? The latter
have to be changed to be in conformity with WTO rules.
Two examples stand out; change in Mexico’s
constitution of 1917 and that of India’s Patent Law.

Critics point out that WTO is not elected to run the world
economy or to act as a global government. It operates
in secret and seems to see its mandate, critics say,
as undermining the rights of the sovereign states. This
is in contrast to the UN system based on the principle of
sovereign equality of states. It has brought in a new
kind of international law, binding and enforceable.

WTO is rapidly usurping the role of a global government

representing the rules-based regime of the policy of
economic globalisation. It seeks to remove any
obstacles in the path of operations and expansion of
global business interests. In practice these ‘obstacles’
are usually policies or democratic processes that act on
behalf of working people, labour rights, environmental
protection, human rights, consumer rights, social
justice, local culture and national sovereignty.

The legitimacy of the WTO was questioned inside, by

several states especially from the developing region,
and outside by people’s organisations at Seattle. The
demonstrations there signified an intrusion of mass
democracy against an authoritarian regime. “A
challenge to politics as usual”, The Time magazine
wrote. “Sometimes, even democracy needs, a little
wake up call. The demonstrators issued a profound
challenge to politics as usual.” And the Le Monde said,
“The world is not for sale”.

The project of global capitalism is an imperialist project.

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In the old days capitalist imperialism was based on a

division of labour between a capitalist and non-capitalist
world. Today imperialism is not really about the relation
between a capitalist and non-capitalist world; but has
more to do with the relations within a global capitalist
system. Imperialism today is taking place within the
context of globalisation of capital. It is not a matter of
controlling particular territories. It is a matter of
controlling a whole world economy and global markets
everywhere and all the time. If today’s imperialism does
not typically express itself in direct military domination
of colonies, this does not mean that it is very less
militaristic than the old variety. “If we are going to have
a strong economic relationship that includes our ability
to sell around the world, Europe has got to be the key.
That is what the Kosovo thing is all about”, as president
Clinton said [Schwartz and Layne 1999].

US defence secretary William Cohen, in remarks to

reporters prior to his speech at Microsoft Corporation in
Seattle, put it this way, “The prosperity that companies
like Microsoft now enjoy could not occur without having
the strong miliary that we have” (Associated Press
reports, February 18, 1999). It is evident that the
attempt is to back up economic globalisation by new
global security arrangements and the Kosovo conflict
has provided the opportunity to sketch in its
main components.

An article by Thomas Friedman in the New York Times

entitled ‘What the World Needs Now’ tells it all.
Illustrated by an American flag on a fist it said, among
other things: “for globalism to work, America can’t be
afraid to act like the almighty superpower it is... The
hidden hand of the market will never work without a
hidden fist – McDonalds cannot flourish without
McDonnel Douglas, the designer of the F-15. And the
hidden fist that keeps the world safe for Silicon Valley’s
technologies is called the United States Army, Air
Force, Navy and Marine Corps.”

The technological gap between the US and the rest of

the world is now so great that the two major wars of
1990s, Iraq and Serbia, can be compared to the
colonial expeditions of the last quarter of the 19th
century. A loose working coalition now exists of

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governmental, military and business interests spanning

the computer, media and informational industries. No
less than the geo-strategists, this group has its eyes
focused on an American-directed world and insists that
means of achieving this is the electronically based
information/media component that confers cultural and
general power. “For the US the central objective of an
information age foreign policy must be to win the battle
of the world’s information flows, dominating the air
waves as Great Britain once ruled the waves of the
sea” (David Rathkoff, Foreign Policy, Fall 1997).

The institution most directly affected by globalisation is

the state. The current restructuring of states proceeds
via limitation of democratic politics, declining economic
sovereignty and enlistment of state administrators in the
service of global circuits. In this sense the states
increasingly assume, albeit unevenly or incompletely
the colonial posture administering the coloniser’s needs
by organising the exploitation of labour and natural
resources for global banks and corporations [McMichael
1998:37]. Aijaz Ahmed (1996) describes this in a
different way. “A remarkable mutation seems to be
taking place in the vocation of the nation state in a host
of third world countries. It seems less and less to
represent the interests of the nation in world affairs.
Increasingly the nation state seems to represent the
interests of global finance to the nation state” (Aijaz
Ahmed, Seminar, January 1996). The role of
government is progressively shifting towards providing
an appropriate enabling environment for private
enterprise (UNCTAD 1996). It becomes a ‘transmission
belt of global capital’.

Paul Kennedy (1993) suggests that the important actors

in contemporary world affairs are global corporations.
According to Kenechi Ohmae (1993) “the nation state
has become an unnatural, even dysfunctional unit for
organising human activity and managing economic
endeavours in a borderless world” (Foreign Affairs,
Spring 1993, p 78).

The internationalisation of economic relations gathered

momentum during the development regime which
promoted the ‘nation-building’ concept. The shift from
the ‘development regime’ (1950 to 1970) to the ‘debt

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regime’ (1980 onwards) is at the heart of the

reorganisation of the interstate system. The
fundamental shift was from state to capital as the
organising principle of international political economy, a
passage orchestrated by finance capital.

Central to the new economic dispensation is a shift in

the role of the state particularly in its commitment to the
people. There is a major change in the paradigm of
state intervention, a fundamental change in its welfare
commitment. After having demolished the welfare state,
globalisers now speak of ‘compassionate state’ and
‘humane state’.

“While the state has retained pivotal significance in

globalising capitalism, it has lost its former core attribute
of sovereignty”, Jan Aart Scholote (1997) points out.
“Sovereignty has also disappeared under globalising
capitalism insofar as contemporary states have lost the
capacity for the unilateral exercise of comprehensive
macroeconomic policy. The end of sovereignty is also
reflected in the changes in the state’s
constituents” (International Affairs, 73.3, p 443).

Different Responses

It must however be emphasised that not all states have

been affected by and responded to trans-border
capitalism in the same way. Individual states have of
course faced globalisation with different levels and
kinds of resources, different histories and cultures,
different policy options and choices.

Scholote (1997) points out that amid the diversity,

several major themes in the relationship between global
capitalism and the state in the late 20th century do to
one degree or another hold true for all countries. One is
that the state survives and shows precious little sign to
date of dissolving in the face of globalising capital.
Second trans-border capitalism has together with other
aspects of globalisation, deprived contemporary states
of sovereignty. Third, trans-border capital has given
present-day states certain supra-territorial constituents
in addition to their traditional domestic citizenry. Fourth,
trans-processes of surplus accumulation have arguably
created major disincentives for warfare between states.

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Fifth, supra-territorial capitalism has in general

encouraged contemporary states to reduce many social
security provisions. Sixth, globalising capital has
promoted an unprecedented growth in multilateralism.
Seventh, the foregoing trends in sum have created
major difficulties for the realisation of democracy
through the state (ibid).

The growth of supra-territorial capitalist constituencies

appears to have put significant downward pressures on
the provision of social security. Much evidence points to
the link between the globalisation of capital and the oft-
proclaimed ‘crisis of the welfare state’. In the first three
quarters of the 20th century there was considerable
expansion of social security and welfare programmes
by the states. In many countries this was the result of
protracted struggles by workers and others.

The growing power of trans-border capital has

contributed significantly to a reversal of the trend during
the last decades of the 20th century. At a time when the
financing of many social security systems was coming
under strain in any case, the added pressure from
global capital for reduced taxes and labour costs has
driven many governments to cut back welfare
programmes. In the context of globalisation most
governments have rolled back social welfare
programmes. Such ‘shrinkages’ have been a
cornerstone of many ‘adjustment’ packages in the
south, ‘reform’ programmes in the north and ‘transition’
policies in the former Soviet bloc.

The famous ‘retreat of the state’ is a retreat mainly from

the realm of welfare and social entitlement, combined
however, with very aggressive interventions in favour of
capital. Patnaik (1995) argues that what we are
witnessing is a transition from one paradigm of state
intervention to another. “The shift in general is designed
to bring about three important consequences; first a
weakening of the working class vis-a-vis the capitalist,
second a considerable centralisation of capital and
strengthening of financial interests within the capitalist
class themselves” [Patnaik 1995].

The proponents of globalisation make several claims

about democracy. Liberal democracy is clearly intended

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for the global goal of achieving higher levels of

integration of the world economy especially the market.
There has been a clear shift in the discourse on
democracy. Democracy is the mechanism that will
enable the smooth functioning of the market. The
traditional values of democracy such as human dignity,
freedom, equity and justice are ignored. By dissolving
sovereign statehood, globalising capitalism has made
the traditional model of democracy impracticable.
Transborder production, markets, monies and business
associations readily evade most democratic controls
that might be attempted through a state. Moreover no
mechanisms have been devised thus far to guarantee
transparency, open debate and accountability in
relationships between states and their supraterritorial
constituents” (Schlote, p 444).

Sheth and Nandy (1996) question the triumphalism of

liberal democratic governance. The proponents of
globalisation argue that liberal democracy is the only
suitable form of governance both for managing the
modern state which is now ubiquitous – and for
mediating the forces of rapid economic and cultural
exchange in all societies. This view endorses the
continued existence of the third world societies at the
receiving end of the global system and celebrates the
fact that the option of delinking or opting out from the
global system is no longer available to them. The best
they can do is to adapt to the system [Sheth and Nandy
1996: 13]. Democracy is for liberalisation and its
development model is a part of the larger agenda of
globalisation. It is a democracy tailored to suit the
needs of the market economy.

To quote Sheth and Nandy again, “By creating political

institutional ‘guarantees’ in the receiving countries
liberal democracy ensures predictability in the world
economic arena...The political governance of different
nation states when structured in the universal term of
liberal democracy is expected to weaken, if not erase,
the idea of national citizenship in favour of
global consumership” [Sheth and Nandy, op cit: 17].

In his book, The End of the Nation-State Jean-Marie

Guehenno (1995) argues that the territorial nation state
is giving way, from without to a welter of overlapping,

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transnational networks fuelled by information

technology; from within, to sub-national ethnic
communities. At stake is the future of democracy for the
transition from the former ‘institutional’ to the coming
‘imperial’ age (dominated by large supranational
organisations and loyalties) involves a massive shift
from public to private purposes and the disintegration
of the common good into irreconcilable selfish interests
[Guehenno 1995]

Globalisation and Human Rights

The impact of globalisation on human rights is both

conceptual and practical and mainly brought into focus
by the changes in the nature of the state and the
interstate system. The decline in the relative autonomy
of the state as a result of globalisation has already been
referred to. It is the state which is the guarantor of
human rights. It has to codify and implement human
rights for its citizens. Therefore any change in the
nature of the state or its authority directly affects its
capacity for implementation of human rights. The clear
shift in the discourse on democracy has direct
consequences for human rights.

A global regime with an economic model that reduces

the role of the state and makes it a vehicle for the
market has serious implications especially for economic
and social rights. Seen against the background of a
traditional second class treatment for these rights they
are in real danger of losing their right to be rights. In
spite of the affirmations of universality, indivisibility and
interrelationship from the beginning, the UN itself has
treated civil and political rights at one level and social
and economic rights at another and apparently lower
level. There is a difference in the language of the two
covenants with regard to the description of rights. The
International Covenant on Civil and Political Rights
(ICCPR), closely following the language of the
Universal Declaration of Human Rights declares
‘everyone has the right’. Instead the International
Covenant on Economic, Social and Cultural Rights
says, “States parties recognise the right of everyone”. It
also says that the implementation of these rights is the
subject to the ‘availability of resources’. The end of the
cold war gave the west a new opportunity to reinforce

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the claim of the primacy of civil and political rights. But

as we have seen, these are also under threat from
globalisation. As for economic and social rights the
states can now plead non-availability of resources, as
under globalisation economic resources are dealt with
by the market.

Another implication for human rights is the use of force

by the state to protect ‘law and order’ in the interests of
capital and transnational corporations and to create and
maintain a climate favourable for investment. In some
places resistance to global capital has invited the action
of the government as in the case of Shell in Ogoniland
in Nigeria. In other instances, officially sanctioned
armed force has been deployed against opposition to
structural adjustment programmes (e g, in Venezuela
and Zambia). The state which retreats from the
interests of the people, moves forward to protect the
interests of the global market.

Privatisation has been a major thrust of globalisation.

Most governments from north to south and from right to
left have embarked upon massive pruning operations in
their state apparatus. Privatisation is very attractive for
investors, particularly public amenities such as
electricity, gas, water, transportation,
telecommunication and health which provide a highly
profitable regular income which is free of risk and where
prior investment made by governments is good for
decades to come. The 1997 Copenhagen Seminar for
Social Progress after an examination of privatisation
around the world concluded “ The privatisation drive
was strongly ideological and therefore simplistic,
particularly in its handling of the relationship between
the public and private sectors. The privatisation
movement took place in the context of the triumph of a
simplistic and vehement neo-liberal ideology” (1997
Copenhagen Seminar). In several instances public
authorities lost the ownership and control of assets that
are constitutive of a national community and of services
that have to be available to all individuals and social

The World Bank which earlier spoke of ‘the minimalist

state’ and ‘shrinking the state’ seems to have changed
its views. There is a growing emphasis in the structural

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adjustment literature on the strong state – strong in

terms of capacity to implement change not strong as
participatory democracies or in building the country’s
economic, social and intellectual capacity. It is
significant that building state capacity is now a major
thrust of programme and technical assistance loan from
the World Bank – centred on public management,
privatisation and market-based regulatory capacity. The
state’s unique strengths are identified as its power to
tax, to protect, to punish and to require participation.

The globalisation of the state must be understood not in

terms of transnational capital escaping the nation
states, but rather in terms of states becoming more and
more attuned to fostering and or accommodating to
capital accumulation on a world scale. This in effect
strengthens the transnational corporations. There is a
significant change in the balance of power between
TNCs and governments. Corporate systems make
TNCs more flexible and often more active in the
international system than governments. Several of them
are richer than a very large number of governments.
Their policies inside a country sometimes violate
domestic laws and most often work against human
rights and justice. National governments have the
obligation to decide whether the interests of the people
they represent should be unconditionally surrendered to
the dictates of private capital in the form of TNCs or
whether they should devise measures to channel the
activities of TNCs to suit requirements of their people.

With the changes in the interstate system, the state and

the increasingly important role played by non-state
actors, rather than the empowerment of the people
which was claimed by the promoters of globalisation,
what is happening is that citizens face a loss of
entitlements. As the organisers of the World Economic
Forum admitted “The forces of financial markets seem
to running amok, humbling governments, reducing the
power of unions and other groups of civil society
creating a sense of extreme vulnerability for the
individual confronted with forces and decision-making
processes way beyond his reach”. Recent
developments show clearly that people are not going to
let things continue like this. They have begun to resist
the political project of global capitalism.

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Everywhere the challenge for the political system is

acute in terms of social order, justice, efficiency and
stability. It can be argued that the trick will be to make
democracy work and to place citizen at the centre of
politics. While democracy as a form of political
governance has been more preponderant in the world
in the last decade, paradoxically the discourse on
democracy has been narrower and poorer. It is
increasingly found today as the institutional options
suitable for a country from those available within one
type of political democracy. Even at the theoretical level
the debates are now about what kind of political
structural specificities and variations can be maintained
for different countries during an ‘irreversible’ process of
homogenisation of the global political and economic
order. Questions about the feasibility and desirability of
such homogenisation and about institutional
alternatives that may deepen democracy have receded
into the background.

The state has to be enabled to recapture its welfare

commitment and to reorient itself towards justice. The
law and order state has to be transformed to justice
state. The state has to be continuously challenged on
social and economic justice and should be rolled
forward to the public space, responsible and
accountable. Rather than yielding all the ground to the
market it should be encouraged to make democratic
intervention in favour of the masses.

A number of ethical and moral issues are raised by the

politics of globalisation especially the transformation of
the state and the deformation of democracy. While
there are considerable differences among political
systems it has been generally accepted that the state is
a moral proxy or moral agent for meeting obligations en
masse through the instrumentalities of law and
administration. Since all modern economies use
markets it is important to remember that it was to
address the failures of the inordinate power or
capitalism’s market dynamics – unemployment,
poverty, homelessness, extremes of wealth and income
and so on – that the state was deemed a moral
counterforce. Under the impact of globalisation the state
is abdicating this role.

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Concern for people as people everywhere involving

both respect and compassion should always be
present. Morality should influence the criteria by which
immediate and long-term objectives are determined. As
pointed out earlier quoting Guehenno, the transition
from the former ‘institutional’ to the coming ‘imperial’
age involves a massive shift from public to private
purposes and the disintegration of the common good
into irreconcilable selfish interests. The fundamental
right of people not to be reduced to the mere
consequence of economic and material forces is
ethically non-negotiable.

[Text of the author’s V K Sukumaran Nair Memorial

Lecture at Trivandrum on March 22, 2000.]


Guehenno, Jean-Marie (1995): iUniversity of Minnesota Press,


Kennedy, Paul (1993): Preparing for the Twenty First Century,

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