Globalization of Economy or Globalization of Poverty?

This article contains valuable information on the disastrous consequences

of the free market economy as represented by WTO, TRIM and TRIP, WB
and IMF, while further clarifying Prout policy on globalisation and the Prout
alternative economy to replace globalisation. The author condemns the
free-market ideology embraced around the world as being equivalent to a
fundamentalist religion with money and profit the Gods of human
existence. We need to get away from this ideological indoctrination that
capitalism is the single available economic model, and help the people
move towards a Zeitgeist wherein the well-being of the collective society is
paramount, and where not a single person is economically left behind!

by Ac. Krtashivananda Avt.

In the quest for economic growth, free-market ideology has been embraced
around the world with the fervor of a fundamentalist religious faith. Money is its
sole measure of value, and its practice is advancing policies that are deepening
social and environmental disintegration everywhere.

The economic profession serves as its priesthood. It champions values that

demean the human spirit. It assumes an imaginary world divorced from reality,
and it is restructuring our institutions of governance in ways that make our most
fundamental problems more difficult to resolve. It has reduced economics to an
ideological shield against intelligent introspection and civic responsibility, and
infused the study of economics with a strong element of ideological
indoctrination.

The Sanctification of Greed

The beliefs espoused by free-market ideologues are familiar to anyone who is
conversant with the language of contemporary economic discourse:

Sustained 'economic growth', as measured by gross national product, is the

criteria of progress.

'Free markets,' unrestrained by government, generally result in the most efficient

and socially optimal allocation of resources.

'Economic globalization', achieved by removing barriers to the free flow of goods

and money everywhere in the world, spurs competition, increases economic
efficiency, creates jobs, lowers consumer prices, increases consumer choice,
increased economic growth, and is generally beneficial to almost everyone.

'Privatization', which moves functions and assets from government to the private
sector, improves efficiency.
The primary responsibility of government is to provide the infrastructure
necessary to advance commerce and enforce the rule of law with respect to
property rights and contracts. These free-market ideological doctrines assume
that:

People are by nature motivated primarily by greed.

The drive to acquire is the highest expression of what it means to be human.

The relentless pursuit of greed and acquisition leads to socially optimal

outcomes.

It is in the best interest of human societies to encourage, honor and reward the
above values.

The economic rationalists, market liberals and members of the corporate class
are working hard to impose the above economic doctrines on the whole world.
What is the result?

Global Income Distribution

World population distribution of arranged by income:

[Source: UNDP, Human Development Report, 1999, Oxford University Press,

New York 2000]

*Top 200 corporations combined sales is equal to 18 times combined income of

1.2 billion people(24% of the world population) living in severe poverty.

*1983-1999 top corporations profits grew by 362.4% while employment grew by

only 14.4%.

* In India, government (both BJP and UPA) shows big figures of foreign
investments, but they forget about the generation of employment:

We can roughly say that investment increased by 425% in 5 years. This is only
the foreign investment.

[Source: Statistical Outline of India 2002-2003; Tata Services Limited, Bombay

House, Mumbai]

Background:
On April 15, 1994, 115 countries of the world concluded the final treaty of the
General Agreement on Trade and Tariff (GATT), and thus laid the ground rules of
the World Trade Organization (WTO). The basic rules are:
Trade Related Investment Measures (TRIM).
Trade Related Intellectual Property rights (TRIP).
General Agreement on Trade in Services (GATS).
TRIM

This regulation abolished:

1. The requirement for national treatment.

2. The prohibition on Quantitative restriction.

The first point means identical treatment has to be extended to domestic

products and to imports. With this clause, the difference between national
enterprise and foreign enterprise is dissolved.

The second point means that the quantitative restrictions involving import
licenses and quotas on imports and exports should be abolished.

NB: The Indian government recently abolished quota restrictions on 1423 items,
against which a BJP M.P. protested and was consequently marginalized by the
ruling party - BJP.

These two provisions will effectively allow full freedom for MNCs inundeveloped
countries, and will drain the foreign exchange and also ruin the small-scale
sector of those countries.

TRIP
According to the provision of TRIP, the Indian Patent Law of 1970 has to be
amended, which the present government did with the help of opposition parties,
and thus befooled the masses.

The Indian Patent Law of 1970 demands that separate patents have to be
obtained for the process or the formula and for the product. Patents on essential
items like agricultural products, human and veterinary medicines, surgical
instruments, pesticides as well as defense and atomic energy-related items were
prohibited. In some cases, the patent on a process was allowed even though the
patent on the ensuing product was prohibited. This enabled the research
scholars to invent new processes for the same product.

The new patent law in WTO extends the scope of patentability, thus restricting
the scope to produce using modified processes. India was supposed to amend
its patent law by 1999, which they did this year. For certain items such as food,
chemicals, medicine and herbs, it has been extended for another five years. By
2004 all national patent laws was supposed to be superseded by international
law. This year they are going to pass law accordingly.
With regard to plant varieties, India is allowed to have its own sui generis system,
which can be applied up to the end of a ten-year period.

WTO is free to devise stiffer "plant breeder rights" so that a global model can be
uniformly applied to all member countries. This will drastically reduce farmers'
rights and curtail their freedom to retain protected seeds from their harvests or to
exchange or sell such seeds. Every time they will have to purchase protected
seeds from the multinational companies.

Import of Patent Rights

Currently, patent holders must obtain a patent from the patent-granting country.
According to the new laws of WTO, imports and locally produced products will be
automatically allowed patent rights on an equal basis.

This means that patents can be obtained not only for establishing manufacturing
monopolies, but also to establish import monopolies.

Patent holders will have no obligation to the national governments that confer the
patent rights.

There will be no check on the import of patented products. They can be sold at a
high transfer price without any price control. The impact of the new patent law will
be extremely harmful on prices, especially of medicines. The cost of many
medicines, including life-saving medicines, will increase by five to ten times.

Availability: The availability of new drugs and medicines from ndigenous sources
will be greatly reduced. The effect of these new patent laws on local research
and development and on small-scale pharmaceutical industries (SSI) will be
extremely adverse. About 18,000 such industries may face bankruptcy and
closure in India only.

GATS
According to this clause, all restrictions on banking, insurance,
telecommunications and air transport have to be repealed. This will enable the
MNCs to control the entire economic infrastructure of any underdeveloped or
developing country.

IMF-WB-WTO: The unholy trinity

So far, IMF (International Monetary Fund) and WB (World Bank) have tried to
control the economies of developing countries using the leverage of loans. This
works only if the country asks for a loan. By introducing the WTO laws, the MNCs
will now control the trade and services of a country. Even the national budget of
any country will be dictated by this trinity vis-�-vis the MNCs.

With the introduction of so-called globalization, economic control will be passed

on to MNCs, and whatever basic infrastructure exists will be ruined instead of
enhanced. Abnormal hikes in the prices of essential commodities increase the
gap between rich and poor, and gradually increasing dependence on foreign
money and expertise are the symptoms that India, for example, is already
displaying by inviting economic colonization.

Instead, India needs to expand and strengthen its basic industrial sector. Small-
scale industries, artisans', farmers', handloom, weavers' and cottage industries
should be encouraged through decentralized planning and by increasing credit
facilities.

Prout policy on globalization

An economic system can remain viable only so long as society has mechanisms
to counter abuses of either state or market power and the erosion of the natural,
social and moral capital that such abuses commonly exacerbate.

The market produces a socially optimal outcome when the government and the
civil society are empowered to act to maintain the following six conditions for
market efficiency, which contradicts monopoly of economic power. Markets
cannot produce them. But without these, a market cannot function efficiently.

1.Fair Competition: Those who hold monopoly power compel the legislators to
rewrite the rules in their favor. Only a firm government hand can restrain the
inexorable tendency towards monopolization. Politicians are rarely willing to exert
such a strong hand, however without crisis, and hence it demands an active and
well-organized civil society. This means the general population must have a high
level of understanding and must be ready to demand fair laws.

2.Moral Capital: Although market theory assumes self-interested individuals, but

the real world markets often reward greedy, dishonest and immoral behavior.
Neither a society nor a market economy can function efficiently without a moral
foundation.

3.Public Goods: Many investments and services that are essential to the public
welfare, such as investment in basic scientific research, public security and
justice, public education, roads, defense and other such infrastructures, are not
supplied by the market but rather are used by it. These are the social costs of
production.

4.Full Cost Pricing: In so-called free market economies, a producer tries to

externalize social and environmental costs in order to increase profit. Without
governmental intervention, no company likes to pay the social costs of its
produce.

5.Just Distribution: In a market system, there is a strong tendency, especially

during periods of economic expansion, for the owners to increase their wealth
and income while the income of laborers lags far behind. A market in which
economic power is unjustly distributed will allocate resources in an unjust and
socially inefficient manner. Market efficiency and institutional legitimacy depends
upon governmental intervention to constantly restore the equity that the forces of
market inexorably erode.

6.Ecological Sustainability: As the human economy grows to fill its ecological

space, limiting the scale of economic subsystems to maintain an optimal balance
with nature becomes necessary for the survival of species. The government must
hence set limits and ensure that appropriate signals are sent to the market. We
can clearly see that a market freed from governmental restraint is inherently
unsustainable because it erodes its own institutional foundations. Hence what is
needed at this stage is a regulated market and not a free market.

New Economic Order

In 1975, observing the success of OPEC, Third World countries meeting at the
United Nations demanded changes in the structure of international trade so as to
bring equality between rich and poor nations. Professor Tinburger proposed the
Restructuring of International Order (RIO) for this purpose. RIO goals are:

To bring parity between rich and poor countries in the prices of

exported goods, to facilitate industrialization with indigenous raw material, and to
reduce the influence of MNCs.

Since 1991 NEO fizzled out making way for WTO.

PROUT proposes the following strategies to ward off the dangers of the current
economic globalization:

- Introduction of economic democracy to counter monopoly of economic

power.

- To create self reliant economic units.

- Formation of economic community amongst equally developed countries like

EEC, ASEAN, ANDEAN, SAARC etc.

- The North Atlantic Free Trade Association (NAFTA) already caused disaster in
Mexican economy. Free market between rich and poor countries will bring
economic disaster to poorer country. Hence it cannot be supported.

- Production should be reoriented based on domestic consumption and

indigenous raw material.

- Encourage small scale industries and mechanise the agriculture in developing

and underdeveloped countries.
- Encourage labor intensive industries.

- Curtail the monopoly of economic power.

- Eradicate corruption.