Rethinking Globalization -- Neither nirvana nor Armageddon
Rethinking Globalization -- Neither nirvana nor Armageddon
Yanuar Nugroho
Director, The Business Watch Indonesia
Secretary General, Uni Sosial Demokrat
Surakarta
yanuar-n@unisosdem.org
Globalization remains a paradox up to today in our world. It
brings about dramatic economic growth and advancement of
technology, but at the same time also causes unprecedented human
and ecological problems. Anthony Giddens (1999) describes this
situation as being like a runaway "juggernaut" with all of us
being trapped in it -- neither able to control the course nor to
stop it. We may become wealthier and have a better life, but we
also suffer from the "manufactured risks" like new diseases,
computer viruses, etc.
As a result of globalization, foreign trade and investment
have grown dramatically. But inequality remains and the gap both
within and between rich and poor countries seems to be widening.
In 1960, the fifth of the world's people who live in the
richest countries had 30 times more income than the fifth living
in the poorest countries. By 1997 this income gap had more than
doubled to 74:1. One-fifth of the world's people live in the
high-income countries that have 86 percent of the world's gross
domestic product (GDP), whereas the poorest fifth received only 1
percent (UNDP, 2002).
Over US$1.5 trillion is exchanged every day in currency
markets around the world. About 95 percent of this total
represents speculative transactions that fail to benefit the
world's poorest countries. The real beneficiaries of
globalization seem to be the transnational corporations. Of the
top 100 companies, 51 are transnational corporations. The
combined sales of the world's top 200 companies surpass the
combined economies of 182 countries (Hertz, 2001).
It is clear that since globalization has both positive and
negative consequences on the development of societies, it has
become a constitutive factor, i.e., it is a result of, but at the
same time also a source, of change.
Consequently, globalization is an irreversible process.
Therefore, it hardly makes sense to adopt a defensive approach in
the effort to combat this phenomenon. What is much more important
is the creation, or further refinement, of operative and
institutional tools, not in order to accept globalization as a
"force majeure" of which we are entirely at the mercy, but in
order to control it more efficiently by defining a democratic and
humane form of global governance. Why?
Over the past 30 years, 2 billion people were added to the
world's population, mostly in developing countries, with
substantial gains in human welfare accompanying the growth. This
included the cutting in half of the infant mortality rate in low
and middle income countries from 11 percent of live births to 6
percent; illiteracy among adults fell from 47 percent to 25
percent, and for women, from 57 percent to 32 percent. Real per
capita income (in population-weighted 1995 dollars) rose from
$989 in 1980 to $1,354 in 2000.
But, some social and environmental trends associated with past
development strategies in the majority of countries are not
sustainable. There are still 1.2 billion people living on less
than $1 a day. The average income in the richest 20 countries is
37 times that in the poorest 20 -- a ratio that has doubled in
the past 40 years, mainly because of lack of growth in the
poorest countries. More than 1 billion people in low and middle-
income countries lack access to safe water, and 2 billion lack
adequate sanitation, subjecting them to avoidable disease and
premature death (WB, 2002).
In Indonesia, absolute poverty (those who live with less than
$2 a day) was reduced to 16 percent of population, and only 12
percent of the population above 15 years old is illiterate. An
improvement? Probably, but do not forget: Infant mortality still
touches 31 per 1,000 live births, child malnutrition affects 25
percent of the total number of children under 5 years, and access
to improved water sources is available to only 78 percent of the
population.
How should we understand this situation? And how should we
place the people -- all humankind -- within the dynamics of
globalization?
Let us go back to some fundamentals to properly understand
this phenomenon. To talk about globalization is to talk about the
consequential impacts of business and financial power on society.
The reason is clear: All empirical evidence shows that the
present character of globalization in cultural, social or
political aspects stands on the massive expansion of business and
financial power.
The fact that it involves the exercise of power, however, does
not mean that globalization is inherently "bad" since the problem
is not the presence or absence of the power (for it is a constant
factor in life), but the way it is being used. So, the problem
with globalization is not about "pro" or "anti", for both seem to
be self-defeating. Rather, how to identify the consequential
powers involved in globalization, then how to devise
accountability movements aimed at those socially consequential
powers. And in practice, this will be closely related to what we
understand as development.
One lesson we must learn is that people, especially the poor,
must be at the center of development -- not only in the
traditional view that people are the engine of change, but also
in the less-traditional sense of development that puts people
first. People are the critical factor in development -- first in
terms of their numbers and the social, health, economic and
environmental consequences of their actions; and second, in terms
of the decisions they make concerning domestic issues and the way
they live their lives. People-centered development also means
full community participation at both the decision-making and
implementation levels.
Poverty remains intractable despite economic growth in many
countries. This partly reflects the problem of income inequality
within countries. Income inequality in turn reflects inequality
of opportunity. What is the cause? At least in part, the still
tragically unmet need for equitable and inclusive investment in
human capital -- e.g., investment in people through better
education and healthcare -- and for wider access to the
infrastructure and capital needed to broaden the basis of
opportunity. Here lies a two-way relationship between poverty and
growth. Growth might be a necessary -- but not a sufficient --
condition for poverty reduction, but persistent poverty and
inequality can reduce growth rates.
A second lesson is that development must be sustainable and
environmentally sound. If economic development destroys the
earth's natural resource base in the process, it is self-
defeating. But, this is what happens. In Indonesia, 40 percent of
Indonesian forests have been cut down since 1950 and half of the
remaining forest has been utilized for public roads, and timber
and oil palm plantations.
The saddening thing is that every minute 5 hectares of forest
disappears -- which means that a forest area equal to the size of
a football field vanishes every 12 seconds. On the other hand, 40
-- 50 million Indonesian people's lives are heavily dependent on
the forests. The impact on habitats is also severe as over the
past 10 years the number of orangutans has decreased by up to 50
percent.
Thus, whatever the economic development argument is, we cannot
but take into account that its practical consequences will
directly affect the majority of the people. Economic development
is not considered any longer as part of social development, as it
should be, but precisely the opposite.
So, although difficult, let us put the people first before all
the growth and profit generated by development and globalization.