Improving the rules of the game

Improving the rules of the game

Yanuar Nugroho
Director, The Business Watch Indonesia, Surakarta
Lecturer, Sahid University, Surakarta
Researcher, Uni Sosial Demokrat, Jakarta
yanuar-n@unisosdem.org

From the Asian Social Forum at Hyderabad, India, in January 2003
to the World Social Forum at Porto Allegre, Brazil, in February
2003, held as the alternative to the World Economic Forum in
Davos, strong criticism - if not rejection- has been leveled at
the current practice of globalization.
But which practice?
Many facts show us that globalization, like everything else under
the sun, is inherently ambivalent. On the one hand, it brings
prosperity, comfort, convenience in the form of economic growth,
technological advancement, more open and democratic governance,
and so forth.
But on the other hand, there are vast amounts of casualties from
its progress, which only benefits some groups or countries.
Some simple statistics from EcoFuture in 2002 highlight the
disparity between the haves and have-nots of our world. As a
percentage of the world's population, Americans comprise only 5
percent, but they consume 30 percent of the world's resources.
The amount of energy used by one American is equivalent to that
used by three Japanese, six Mexicans, 14 Chinese, 38 Indians, 168
Bengalis, or 531 Ethiopians.
Thus it is not exaggerating to say that a person in the United
States or other rich developed countries causes 100 times more
damage to the global environment than a person in a poor country.
Average annual income of the 3.3 billion people in the global
"middle class" is now around US$700-750 and average annual income
of the 1.1 billion people in the global "consumer class" has
reached over $7,500. But, according to the New RoadMap
Foundation, this consumer class takes home 64% of the world's
income!
Globalization is here to stay, but we must end its current
patterns and practices that neglect everything else for profit
accumulation alone. The concerns expressed by many about the
overall current globalization process must be acknowledged and
addressed in any development model.

We must recognize that these concerns are real and can affect the
daily lives of millions, even with the inescapable fact that we
cannot turn back the clock on globalization. Technological
advances that have fuelled it cannot be shunted aside, and
restrictions on unimpeded access to information and
communications technology, for example, will ultimately be self-
defeating for those who try to impose them.
The question is how to start. Many suggestions could be made, but
going directly to the structure and the system of "decision-
making" in these whole worldly dynamics might be more helpful.
Take the graph below.

Source : UNDP (2002), www.undp.org
With 80 developing - or poor -- countries controlled by the
International Monetary Fund (IMF) through the International
Development Association, the "hospital" for those suffering from
severe financial crises, there is practically no power for them
to change the current pattern and practice of globalization being
imposed.
A cursory examination makes the so-called participation of poor
nations appear encouraging. Developing country membership in the
World Trade Organization has risen rapidly in recent years to a
total of 110 states.
But membership does not equate with influence. Many developing
countries have limited or non-existent representation in Geneva.
A case in point: 19 of the 42 African WTO members have zero
representation. Many other developing countries lack the
technical capacity to negotiate meaningfully. Too often, the
rules of the game are set by the rich and the better-prepared
developing countries.
And where the rules have already been set- for example in the
case of customs valuation procedures--they have often been based
on developed country models, which can be inappropriate and
prohibitively expensive for poor countries. In fact, many WTO
signatories have been unable to comply with agreements negotiated
under the Uruguay round.
We must go beyond the clichid and irrelevant debate on 'for or
against' globalization. Thus, it is the challenge to us to
harness the positive aspects of globalization in the cause of
development and poverty reduction, and to offset its negative
aspects for those adversely affected.
The motto cannot be "there is no alternative" a.k.a. TINA, but,
"there are thousands of alternatives", or TATA. It is that
another world is possible, another practice of globalization is
possible - that is the globalization with a human face, one that
is inclusive, promotes social equity and works for the poor.
If we are to have a balanced and inclusive world trading system
that attracts the adherence of developing countries, much needs
to be done to enhance their capacity to participate in the rule-
making process, moving away from the "one size fits all" approach
to the rules themselves, a fact acknowledged by the World Bank in
2002. This move will be to ensure that their implementation does
not place unreasonable financial and technical burdens on those
least able to bear them.
We need to work with others on issues and solutions. This means
partnerships within countries; partnerships between countries and
their external supporters; and partnerships among these external
supporters themselves.
Globalization properly conceived means much more than merely
market integration; it also means and requires working together
toward agreed solutions to global problems. And these solutions
need to be developed in a cooperative and transparent way that
explicitly includes the priorities of the poorest countries and
their peoples.
More generally, we need an increasingly inclusive approach to
development issues in general and to poverty reduction. And more
particularly, fair trade, as the heart of our "new"
globalization, must be the foundation stone of all our business
practices and trading works in an increasingly interdependent
21st century world.
At this point, we need to (re)start our understanding on the
ongoing process of globalization nowadays which has started to
undermine life. Our total world GDP is estimated at US$30
trillion per year and total value of export-import scale is $6.2
trillion annually. But, the whole value of stock and capital
markets is worth between $180 trillion to $200 trillion per year!
Thus there exists a "virtual value" of world production as much
as $150 trillion to 170 trillion, which means two things.
First, the old and conservative concept of added value must be
accompanied by virtual value, if we do not want to lag behind the
history of modern economics. On the New York Stock Exchange
(NYSC) in 1995, for example, the price for Coca-Cola brand shares
was $80 billion, compared to its physical assets of $35 billion
at the time from its total capitalization of as much as $115
billion.
Clearly, this virtual value was much higher than physical assets
of the company itself.
Second is that the concept of power, particularly power of
capital, should also be renewed.
Back to the NYSC, where its capitalization (virtual) value is now
more than $17.2 trillion per day. Compare this to the gross
domestic product (GDP) of the United States, which is only $10.3
trillion per year and the combination of the GDP of 12 EU
countries as $9.5 trillion per year. The speed and power of
"fooling around with funds" from this capital market is 11.5
trillion per day per 80 countries. This fact shows that the
state, held up to the power of capital, is decidedly more
powerless.
It is thus a clichi to say that democracy is only targeted at
"the state power" since the forms and socially consequential
exercise of power are shifting. The biggest irony in our time is
the fact that the "power of capital" has escaped from the
criteria of public accountability, toward which it has been
applied to the "power of the state/government".
The irony is from the premise that power is involved within the
whole process of our shared life. Without this, democracy would
lose its raison d'jtre, for it is substantially an idea or
movement to make any socially consequential exercise of power
accountable. Thus, we cannot allow the sundering process of
ownership/property from its relationship with power, since there
is no property which does not involve power, and vice versa.
What must be stated is that any socially consequential exercise
of power based on private property should not escape the
democratic criteria. Perhaps we should pay more attention to the
fact that what is most influential in our societal life nowadays
is not only the dictatorship of the state, but rather oligarchic
domination of capital -or even the combination of both.
Improving the rules of the game is itself an ambitious vision.
But we must work to realize it if we are to go forward together
into a new century in which the long pent-up aspirations of the
poor of the world are to have the chance for fulfilment that they
deserve.
Technology and its consequences are increasingly linking us
together into one world. But this "one world" cannot remain split
along a fault line that separates the lives and aspirations of
the rich and the poor. Technological progress alone will not
bridge the divide.
Rather, our sense of common humanity must be the shared bond and
the driving force that makes us also increasingly of one mind,
and part of one united endeavor, in the development enterprise
that we all serve.

***
Surakarta, 10 March 2003

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