"Let Them Eat GNP ... Globalization and the Manufacture of Poverty in the Third World"
Timothy C. Weiskel
Visiting Scholar
Institute of Liberal Arts and Interdisciplinary Studies
Emerson College
@nticopyright, 2002, Reproduce and Distribute



I. Introduction

    Globalization is not new.  It is a process that has been part of the development of human economies since the beginning of long-distance, trans-ethinic trade.  Economic exchange has always out distanced the social units of community and jurisdictions of political control.  Globalization involves the attempt to extend the realm of regulation and control to the range of exchange.  This is always a "catch-up game," and it has never been fully achieved.

    Nevertheless, in the modern era -- for the last 500 years or so -- there have been three overlapping, yet analytically distinct, phases in the driving force behind globalization.  It is useful to keep these in mind, since each phase has a slightly different motivation behind it and consequently a different logic in to its historical development.  To understand the nature of what has happened in the past and what is unfolding in our day, it is useful, then, to keep these three analytical stages clearly in mind.  They are:

 
Dominant form of Economic Activity Type of Economic System
 
Trade & Exchange
< 1450 - 1800

(Merchants interested in "buying cheap and selling dear;" seek monopoly control of transportation; explore new sources of high value to weight ratio items and new markets to transport them to; merchants indifferent towards who produces goods)

 Merchant Capitalism
 
Fabrication & Manufacturing
1750 - 1929

(The more "efficient" production of goods becomes key to "wealth;" requires access to "raw materials" and "free" labor, available for a wage; machinery, mechanical, water and carbon-based power increase total output which then must find outlets for sale.)

 Industrial Capitalism
 
Investment, Banking, Stock Exchanges
1603 - Present

(Main source of wealth is interest on money that is loaned to merchants or industrialists; investments in joint stock companies afford differential returns, so stocks are bought and sold as if they were commodities; concern is for a maximum and continuous rate of return; little concern for where raw materials or labor comes from or how it is recruited or treated so long as the rate of return can outperform other sources of merchant or industrial capital; abstract measures of "welfare" -- Gross National Product & GNP per capita drive the calculations of public policy) 

 Financial Capitalism
 
(Is this a "new" form of capitalism?)
Managerial Capitalism?
    Each form of capitalism has its own "genius" -- that is, its own internal logic, it paradigmatic models of success, and its own forms of internal contradiction.  Moreover, there are substantial contradictions between each major form of capitalism, and there are frequent are heated disputes between individuals and groups represented in each camp.  Most recently, there have been marked disputes between financial capitalists and what might be called "managerial capitalists."   The lines are often blurred between these two categories or classes of people, but many would argue that these internal contradictions are precisely the problem.
 



II. The Cold War and the Rhetoric of "Independence" and "Development"

        Much of the interest in Third World areas increased after World War II as the world at large became enmeshed in a "Cold War" -- a prolonged standoff between "Eastern Block" countries -- consisting largely of the Soviet Union and its allies --  and "Western" countries made up largely of the United States and its Western European wartime allies.

        Much of the Third World (India, Africa, and Asian countries) felt they had contributed substantially to the war effort or where made to suffer inordinately for what was essentially an intra-European struggle.  The deterioration of economic, social and environmental circumstances during the war gave many an added impetus for opposing or resisting continued colonial oppression.  The Europeans, for there part, were largely too weak to launch extended military campaigns in their colonies.  In addition, they were "hoisted by their own petard" because of promises made to "liberate" people (largely Europeans) from "oppression."  Roosevelt made this message a part of the "Atlantic Charter,"  and many emerging nationalist groups throughout the Third World looked to the U.S. as a beacon of hope in their anti-colonial struggles.

        The U.S. for its part saw the danger of  the "potential loss" of the former French and British colonies.  With the Soviet Union emerging on the world stage as an alternative to the West, the U.S. feared that because of their bitterness toward their colonial masters, many of the anti-colonialist struggles would develop sympathies and explore potential economic relations with the Soviet Union and its Eastern European allies.

        Such a move on the part of large numbers of Third World populations would have been interpreted by the corporations as a major tragedy.  Their major concerns included the necessity of assuring access to raw materials, the need to seek out new markets for selling manufactured goods and the discover of new opportunities for investment.  In short, the focus was upon the dominant interests of merchant, industrial and, increasingly, finance capital.  The largest threat to the maintenance or expansion of financial capital was the threat that Soviets would gain inordinate influence in Third World regions and preclude or heavily restrict the terms of Western investment.

        To counter this perceived threat, the U.S. and Europe because newly interested in the "development" of Africa, Asia and the Middle East.   Since political emancipation was the preoccupation of the emerging nationalist elites in each of the areas of the Third World, both European regimes and the U.S. government became enthusiastic proponents (to varying degrees) of the "independence" of these states at the same time that it promoted "development" schemes to assure the continuity of access and dominance of control in local economies.

        India led the way in 1948, and from 1957 onwards "independence" was granted to a remarkable number of regimes in an amazingly short period of time.  At the same time Western financial interests recognized this transition to "newly independent" status as a truly staggering investment opportunity.  Government "aid" packages were crafted accordingly, whereby the U.S. or former European colonial power would "lend" the newly independent Third World regimes vast sums of money to build roads, dams, railroads, refineries, power plants,  ports, -- in short, all the infrastructure necessary for the next phase of merchant, industrial and financial capital to penetrate these regions of the world.   This was largely "public money" (i.e.. from taxpayers) lent  to Third World regimes which did one of two things with it:  1) purchased the goods and engineering services from the Western regimes from which the "loans" had come to build the infrastructure; and 2) pocketed a portion of the remaining amounts, placing the money in Western Banks and thereby returning it to its source.

         In either case, ordinary populations saw little if any of the benefit of these funds, which circulated through these "newly independent countries" only to end up back in Western banks, bringing with them an incremental payment of interest.  In some cases the loans were made on unrealistic economic terms to begin with, but the effort was fueled by an anti-Soviet anxiety.   The thought was that even if the loan could not be repaid, perhaps the country's population would still look kindly upon America for the loan and support the U.S. in various international forums like the United Nations.  In any case, the loans were thought to stimulate the development of the Gross National Product (GNP).

    This is an overall statistical measure of the amount of economic activity, and it is true that vast amounts of money loaned to the Third World increased certain kinds of economic activity, event though it suppressed other kinds of activity.  In effect, there was growth without development in most of the Third World regimes.  That is,  the overall measures of GNP and even GNP per capita often increased.

    But this growth was taking place at the expense of development.  Incomes became more skewed to the very few rich and the growing mass of poverty stricken populations, and the countries involved had not changed the basic colonial structure of their economies or polities.  They were essentially agricultural economies dependent upon commodity exports or extractive industries like mining or oil exploitation.  All the manufacturing still occurred in Europe and what ever "independence" in political terms, it had no reality in everyday life.  "Neo-colonial elites" managed the system for the growing benefit of foreign regimes and multinational corporations.

III.  "Trade Not Aid" -- Henry Kissinger

       In many cases, the repayment of the loans was the very sincere intention of both the "donor" country and the "recipient country."  But in the post-war era the international trading system worked systematically against the interests of the "primary producer."  The reason for this is largely the triumph of the market ideology of trade integrated societies.

        Whenever the bankruptcy of any particular regime became evident the Western world began to impose one "cookie cutter" solution.  The effort was to restrict the release of further loans to these independent countries unless they agreed to certain conditions.  This "conditionality" of loans from the World Bank made "independent," autonomous development virtually impossible.  Development -- what ever that was supposed to mean -- had to take place increasingly according to the priorities of the World Bank and the International Monetary Fund (IMF).

        Invariably these two institutions emerged as the dominant post-war economic mechanisms for enforcing the "export-led," commodity production model of growth in the Third World.  Ironically, it the Bank and the IMF have ultimately "failed" because of their great success.   The "secular decline" in commodity prices throughout the world, throughout the last 50 years makes this apparent to anyone who examines the "barter terms of trade."  Basically the Third World regimes were caught in what was called the "primary producer's squeeze."   The more they produce, the less they receive in return because gluts of commodities produce falling prices.

        With the relative decline in income, and a need to maintain infrastructure and meet the needs for education, housing and health of a burgeoning population, Third World countries were induced to borrow money just to pay current accounts and keep the price of staple food-stuffs cheap in the capital cities.    In asking for more money, however, the World Bank and IMF continued to impose "conditionality," and one after another of the Third World capital cities experiences "IMF Food Riots" as a result.

        The only prescription for this debt-sickness was more of the medicine that made the patient sick in the first place -- expand commodity exports, cut government salaries and social services, and keep your unruly populations in order with the use or threatened use of violence.  Thus the systematic exercise of the international trading regime in the post-war world has lead to the rise of violent and corrupt regimes committed to extracting surpluses from an increasingly restive population that is told that it shouldn't be so dissatisfied because the GNP is increasing.

IV.  International Struggle for "Free Trade"

        As inequitable and unjust as the "business as usual" scheme of post-war international trade has been, there are still those who seek to pass agreements and regulations to make it work even more in their particular interest.  Specifically, the international business community -- primarily led by the transnational corporations -- as sought support from a whole range of governments to further its capacity to trade more freely, control the conditions of manufacturing and open up unrestrained opportunities for investment.

        To this end, merchant, industrial and financial capital has sought to influence governments around the world pass a series of "free trade" agreements to facilitate their welfare.   The North American Free Trade Act (NAFTA), the General Agreement on Tariffs and Trade (GATT) and its successor the World Trade Organization (WTO), the Multilateral Agreement on Investments (MAI), and the forthcoming Free Trade Agreement for the Americas (FTAA) are all designed to accomplish this.   Citizens -- or for that matter their legislators -- have not always been well informed about the provisions and mechanisms of these agreements.  Nevertheless, once they are passed, these "free trade" agreements have enormous implications both within the industrial world and in the Third World.

        It is for this reason that numerous groups have begun to react angrily to two aspects of these corporate crafted agreements. (See: "What Happened in Seattle?")   First, there is a growing concern and vocal concern for the way in which these agreements will affect  social, labor and environmental standards in this country and across the world.  Secondly, there is a smoldering anger, bordering on explosive outrage, at the ways in which these "sweetheart deals" for investors were railroaded through the reputedly "democratic" institutions in virtually every country of the world.

 
VI. Where Can We Go From Here?

Supplementary Materials:


Because it was interrupted in class, you can view the video clip on a hi-speed internet connection through a RealPlayer - click here to view:
  Global Village - Global Pillage
In addition you may want to consider the way in which images of Americans are received and perceived in other parts of the world.  Consider, for example, the phenomena of Dubyaman.
Click here to listen to the
Interview with Jug Suraiya, of The Times of India, creator of Dubyaman. These cartoons are being carried daily in the largest English language paper in the largest English-speaking country in the world.

[return to lecture notes]
 


    Consider as well the case of the "humanitarian" intervention of the Bush administration in Somalia that has just been made into a movie entitled, Black Hawk Down.  This film was recently screened (illegally, from a "pirated video") in Somalia among the population that experienced the events.  Listen to the following account:
Somalis Watch Black Hawk Down
On the Media, January 26, 2002, WNYC, New York.
    The movie “Black Hawk Down” is doing well, earning favorable reviews as well as high box office draws. But the film about a botched military raid on a Somali warlord is getting different reactions when it’s shown in Somalia. Brooke talks with New York Times reporter Donald McNeil about how the movie played before an audience Hollywood never expected would see it.


Do you think the response to the film in the United States is the same as that of the people of Somalia?  What do you think the response to the film will be in other Third World countries previously unrelated or unaware of the Somali episode?

    Or consider the use of video in the "Chiapas Media Project."  This is an example of a "grassroots" video project which opened multiple links between the global North and the South, and stands as an impressive example of what can be achieved by a peasant-student alliance. To view the video clip on a hi-speed internet connection through a RealPlayer - click here :  The Chiapas Media Project


 
 
One of the most articulate critics of globalization from the Indian sub-continent is Arundhati Roy, an Indian author, environmental campaigner and social activist.  Her latest book, published by South End Press in Boston, gives a forceful critique of globalization on the part of the populations that are often its victims. In addition, consider some of her recent articles.
Alternet's Guide to Globaliation
"Global Justice's New Face," AlterNet, February 15, 2002
CorpWatch - ISSUE LIBRARY: Globalization 101
including:
"From Melbourne to Prague: the Struggle for a Deglobalized World"
By Walden Bello
Focus on the Global South
September 6, 2000