Dangers and Opportunities

Why is it necessary to recount this story? Is it not best forgotten? Perhaps it is. However, because mainstream European historiography obfuscates history, it is important to tell the story also from the other side. The present crisis in Western civilization makes it important to look at where we have come from, and to acknowledge the legacy of European exploitation of weaker or weakened civilizations in the South. It is important to remember history, even in its not very flattering details, in order to be able to go beyond it, to sublimate it, to pardon those who may have perpetrated acts of brutality in the course of what they regarded as their so-called “the white man’s burden”.

Close on the heels of England were the other European countries, just industrialising out of medieval rural backwardness. Led by Germany’s Bismarck the European political leadership met in Berlin (in this city where we assemble today) in 1884 to partition Africa amongst themselves as their colonies. Imperial exploitation enabled European capitalists to reduce their cost of production through importation of cheap raw materials as well as secure captive markets for their manufactured products and lands for the settlement of European farmers and bureaucrats. All this ensured high rates of profits for the capitalist class, out of which they could now afford to pay higher wages to their own workers at home (the imperial labour aristocracy), and thus continue to develop their national productive forces. The gains of imperialism were unequal, if there were indeed any gains for the South. The Austrian-American political-economist, Joseph Schumpeter, was later to describe capitalism as “creative destruction”, but he failed to notice that there was more destruction in the South and more creation in the North.

The story of the first half of the twentieth century is all too familiar – the collapse of the pre-first World War economy with the Wall Street crash of 1929; the years of the Great Depression; the emergence of “new deal” economics brilliantly crafted by Keynes to rescue the Empire; the rise of fascism and militarism; and then the Second World War. And, finally, there was the Jewish holocaust, which ended with the creation of the state of Israel in 1948 -- an imperial extension of Europe into the heartland of the Middle East -- through which Europe was able, or so it thought, to expunge its guilt. The two world wars were essentially inter-imperialist wars, except for the complication of the Second World War where a revolutionised Soviet Union entered the War as an ally of one sub-set of imperialist countries (the Allied powers), but soon after the War, the communist challenge posed a threat to the global domination of the capitalist West. That story of the Cold War and the end of the Soviet Union is also well known.

All this time, the South did not matter. It was colonised (like most of Africa and Asia) or semi-colonised (like China and most of Latin America). But, further down the road, the loss of the colonies between 1950 and 1970 presented Europe with a major crisis. The US benefitted for a short time out of the liquidation of the European empire, but the Cold War soon wiped out, or corrupted, most of those gains. The process of decolonisation was not always peaceful -- Algeria, Kenya, Vietnam, Indonesia, Angola, Mozambique and South Africa, among others, are testimony to the bitter struggle of the Europeans to maintain control over their empire. The “loss” of China to communism was a shock to the West, and so also the rebellion of Cuba after the 1959 revolution. Now we have a new situation. The indigenous peoples of South America are gaining collective political consciousness and self-confidence, and in countries like Venezuela, Bolivia and Ecuador, demanding a rightful ownership and control over their natural resources.

The second oil crisis in 1979 hit the North as well as the South. The West was already facing other multi-pronged crises – the saturation of western markets in invest¬ment finance and goods, the fall of the Shah of Iran in 1979, the invasion of Afghanistan in the same year, the domestic crisis of profitability, the rising demand of the working classes (especially in the UK) for a better share in the national income, and the loom¬ing recession.

Faced with this situation, among other policy measures, the British government deregulated its economy, privatized state assets, and took away welfare benefits from the people (including pensions) and siphoned these to their business corporations to salvage them from declining profits and higher wage demands from their workers. Then, at the international level, a rapid move towards trade liberalisation followed by the demand for removing all restrictions on the movement of capital, and "national treatment" for the owners of imperial capital - the demand that they be given the same treatment as nationals in the third countries. The UK was quickly followed by the US under Reagan and then by other Northern countries. In this they used their power in rule-making bodies such as the IMF, the WTO and the World Intellectual Property Organisation (WIPO).  In the WIPO, they used their power to enforce property rules on the South to enforce intellectual property systems that hinder technology transfer from the Empire. At the same time - through the WTO TRIPS agreement, strict rules of intellectual property and other means - it promoted expropriation of traditional knowledge of food and medicines. This undermines the systems of the commons, which rules in many African traditional societies in the areas of water, seeds, herbal medicine, etc.

This is an important detail of history that is not sufficiently acknowledged, or even understood, by those who talk about globalisation in general terms. What is not realised is that the specific policies put in place to get the Anglo-Saxon economies out of their multiple crises got translated into policies for universal application under the banner of “globalisation” taken out of their political and geographical context.  It is this -- namely the official adoption by the institutions of economic global governance of the Anglo-Saxon liberalisation of the economy – that was the beginning of what is now identified as the neoliberal ideology.

Globalisation in this period (from about the mid-1980s to 2005), in other words, had a distinct Anglo-Saxon face.  It was not just any kind of globalisation; it was neo-liberal globalisation. The countries of the south that were compelled to borrow from the IMF or the World Bank or the donors were subjected to stiff conditions and penalties in order to force them to conform to certain macroeconomic policies as set out by the donors and the Bretton Woods Institutions (BWIs).  These included:

o Free market ideology – let the market decide;
o Privatisation of state assets and denationalisation;
o Deregulation (minimum state interference in the economy);
o Control over wages and conditions of work;
o Stiff budget deficit controls;
o Trade liberalisation and reduction of tariffs;
o Reduction of social expenditure on things like health and education; and
o Forcing the south to open up of the capital market to investments from the north.

From an intellectual point of view, the tragedy of this particular phase of globalisation is that the evolution of “development theory” got decoupled from the political-economic context of the south.  The mainstream development theory had been constructed not for the benefit of the developing countries, as it purported, but for integrating them into a global economy for the benefit of those who dominated the global economy. 

Excerpted from Yash Tandon's speech during Die Linke Im Bundestag and Rosa Luxemburg Foundation conference on “Left Ways Out of the Crisis” Berlin, March 20, 2009.The author is Former Executive Director of the South Centre, and Chairman of SEATINI