Critique of Globalization and Trans-Nationalism - Report Example

Critique of Globalization/ Trans-nationalism The proponents of Liberalization and globalization claim that globalization has opened up newer vistas of trade and business all around the globe. It is said that opening up of economies has now tilted the balance in favor of market forces, which is helping the consumer by way of providing quality at reasonable prices. As a result of globalization market forces have started the policies with the role of respective governments becoming limited in determining the nature of imports and exports. It is now the MNCs who are effectively dictating the policies to the governments. With globalisation, MNCs began to explore the markets outside there domestic grounds. In order to leverage the economies of scale at different locations, such companies try to set up some of their operations at these locations. Moreover, with the advancement in ICT, global distances have tended to become smaller while the world is gradually being seen as a global village. Bracken (2004) underlines that it was since early 1990s when the term ‘Globalization’ became a catch phrase as it started entering into all walks of life even in developing economies. Globalisation has been in existence for quite a while. In the early ages it was essentially limited to business and trade. But with the beginning of the new form of market driven governments, globalisation has filtered down to almost all walks of life like, media, culture, and of course the trade and business practices. During the early ages, these trading companies, once in a foreign land, used to try influencing the ruling class in order to strengthen their business goals. Gradually these companies also succeeded in capturing power in those countries, thus giving rise to the practice of imperialism. British companies were in the forefront of such practices in those early days leading to a situation when most parts of the world were ruled by Britain. In modern times, situation is very different, now the world is a vastly different society with modern means of communication and technology, ideologies, international treaties etc. But the growing influence of Multi National Corporations (MNCs) in almost all walks of life is being termed as a cause of worry by some analysts. What provides fuel to such concerns is the fact that these MNCs come from those very nations who were involved in such practices in those early days. Bodies like United Nations (UN) and World Trade Organisation (WTO) have been trying to implement a code of conduct for business practices, but at times these international organisations appear openly dependent on the so-called developed nations. Such international organisations have been asking for the reduction in cross border tariffs, international movements of people, global circulation of ideas, exchange of cultural values, increasing activities of Non Governmental Organisations (NGOs) or voluntary organisations etc. Trans-nationalism essentially meant a focus on broader area of cooperation in cultural exchanges, economic exchanges connecting people, governments, organizations or institutions across the borders of nation-states thus facilitating the flow of people, ideas and goods between different countries and regions. On the other hand globalization, though implies similar connotations, has become more associated with economic activities and a hegemonistic attitude of big corporate houses. While trans-nationalization worked with exchanges across boundaries connecting the countries and regions, globalization knows no boundaries. Moreover with the advancement of communication technologies spread of globalization has become more prominent and now it has replaced the word trans-nationalization. While trans-nationalization effectively meant cooperation and coordination between two or more countries, globalization works with involvement of many countries in similar practice or trade. Economic activities have now dominated as the major players in deciding the policies. But the situation becomes alarming when the government relegates its function of being a welfare state a distant second priority and starts playing into the hands of MNCs. As a result of such dependence the under prepared countries start adopting some policies for which these countries might not yet be ready and the contradictions lead to situations like the Mexican crisis of 1994 or the Asian crisis of 1997. The Mexican peso crisis was triggered by the sudden devaluation of the Mexican peso, by the then rulers, to maximize the export gains. It set off a chain reaction once investor’s started doubting the sustainability of exchange arrangement for want of adequate of supervision and regulation (Martinez, 1998). Mexican economy experienced intense hiccups during those days which could be resolved when some of the international organizations extended financial support to the country. Similarly analyzing the East Asian economies Rajan et al (2003) contend that these economies were overwhelmingly relationship based until the end of 1980s. At a time the volume of profitable investment opportunities greatly exceeded the available capital. This capital shortage resulted in opening up of these economies thus bringing in capital inflows, without adequate institutional infrastructure to regulate the sources of capital and borrowers. The Foreign Financial Institutions therefore did short term investments and then pulled the trigger by taking out their investments with profits, leaving the East Asian nations with deep wound in their economic conditions. This crisis too was resolved only after the intervention of international organizations. Role of media has become very crucial in the spread of globalization. Media plays a very important role in telling the people about the values, ideas, opinions and culture of any country and organisation. For this reason Multi National Organisations hire Public Relation companies to undertake the task of influencing the communicative practices of individuals and institutions, which in turn influences the people and societies. This is leading to another form of imperialism known as cultural imperialism. Growth in Information Communication Technology (ICT) has made people dependent on the modern means of communication thus creating an ‘information society’ in which social interaction too becomes dependent on use of such technology. After the Second World War, when the world appear to be in need of rebuilding and rejuvenated efforts for healing the wounds. Economists started thinking towards finding solutions to the poverty and underdevelopment left behind by the disintegrating colonial system (Piasecki, 2004). After the globalization regime, though there’s still talk about reducing poverty and underdevelopment, but most of the decisions are influenced by the profitability aspect. As a result, the richer are becoming more rich while the poorer one’s remain where they were. Inequality and poverty figures have not diminished significantly, but the amount of wealth collected by the likes of Bill Gates has certainly grown many folds. Today we have clubs of billionaires, who keep exchanging their places on the list, but there’s no talk about the equi-distribution of this wealth. Those asking for a free flow of media include mainstream economists, who argue that more opportunities for sharing information, borderless communication and global commerce will emerge if we allow globalisation of media to its potential. Such policies find wide support from media moguls like Rupert Murdoch and companies like AOL/Time Warner. Unequal distribution of communication power and resources further increase the worries about the expansion of such imperialist forces from the western part of the world. But, what causes the fears of imperialism is the cordial relation of Rupert Murdoch with the US govt. administration. Economists and business leaders, favoring globalisation treat the people all across the global as potential consumers and they are resorting to all means of convincing the global consumers about the benefits of globalisation. They’ve got enough money power to influence the media in spreading good words about their plans. They resort to the use of ‘soft power’ which means ability to achieve desired outcomes in international affairs through attraction rather than compulsion. This method works by convincing governments and institutions to agree to their ideas. A gradual buildup in local media, about the MNE followed by more concessions helps in convincing the local governments. Disenchantment with the globalisation is also perceptible even in some of the developed nations as well. For example in US employees’ unions are up in arms against the outsourcing being resorted to by many IT companies, manufacturing companies, Banks, insurance companies etc. Such companies have started outsourcing their lower end jobs, customer care tasks etc. to regions where labour is available at cheaper rates. As a result these companies have resorted to laying-off their employees back home. Governments too appear to be mute spectators to these practices, unconcerned about the plight of those left jobless. As of now these MNCs are providing jobs in some of the developing nations, but they are not doing it out of charity, it being done only because these companies are able to make lot of profits. Whenever the labour rates become high, these companies are bound to take a flight to elsewhere, leaving the existing workforce in the lurch. Therefore, globalization is certain to benefit big corporate houses and some of the developed nations, but it cannot be said about the poorer and developing nations. If such countries benefit then they’ll be the fortunate ones. Those nations who adopt the WTO and World bank dictates about globalization policies without much thought about their actual preparedness for the onslaught of MNCs are bound to be adversely affected in the long run. References: 1. Bracken, Paul (2004), Yale SOM Working Paper No. OB-06, PM-05, OL-19, Yale School of Management, available online at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=514422#PaperDownload (July 8, 2007) 2. available online at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=137550 (July 9, 2007) 3. Martinez, Guillermo Ortiz (1998). What Lessons Does the Mexican Crisis Hold for Recovery in Asia? Finance and Development (IMF), June 1998, Volume 35, Number 2. 4. Piasecki, Ryszard and Wolnicki, Miron (2004). The evolution of development economics and globalization. International Journal of Social Economics Vol. 31 No. 3, 2004. 5. Rajan, Raghuram G. and Luigi Zingales (2003) Which Capitalism? Lessons from the East Asian Crisis. Journal of Applied Corporate Finance, Vol. 11, No. 3, Fall 1998. Read More