The Economics and Politics of the World Social Forum: Lessons for the Struggle against ‘Globalisation’

Table of Contents:
I. How and Why the World Social Forum Emerged
II. WSF Mumbai 2004 and the NGO Phenomenon in India

By Research Unit for Political Economy
Ground floor, Sidhwa Estate, N.A. Sawant Marg, Colaba
Mumbai (Bombay), India 400005.

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It became fashionable in the 1990s to use the term ‘globalisation’ to describe the economic changes being brought about worldwide. We were told that economies worldwide were becoming more integrated, and that prosperity would spread to all.

The great range of actual measures carried on under the label of globalisation, however, were not those of integration and development. Rather, they were processes of imposition, disintegration, underdevelopment and appropriation. They were of continued extraction of debt servicing payments of the third world; depression of the prices of raw materials exported by the same countries; removal of tariff protection for their vulnerable productive sectors; removal of restraints on foreign direct investment, allowing giant foreign corporations to grab larger sectors of the third world’s economies; removal of restraints on the entry and exit of massive flows of speculative international capital, allowing their movements to dictate economic life; reduction of State spending on productive activity, development and welfare; privatisation of activities, assets and natural resources; sharp increases in the cost of essential services and goods such as electricity, fuel, health care, education, transport, and food (accompanied by the harsher depression of women’s consumption within each family’s declining consumption); withdrawal of subsidised credit earlier directed to starved sectors; dismantling of workers’ security of employment; reduction of the share of wages in the social product; suppression of domestic industry in the third world and closures of manufacturing firms on a massive scale; ruination of independent small industries; ruination of the handicraft/handloom sector; replacement of subsistence crops with cash crops; destruction of food security; removal of ceilings on landholdings; dispossession of tribal lands and the handing over of forests to corporate interests; developing dependence of peasants on the new (and profoundly hazardous) products of biotechnology; dumping of hazardous wastes in, and the shifting of harmful processes to, the third world; use of women as sweated factory labour; growth of prostitution amid large-scale unemployment; invasion of images aimed at making women consumers of the beauty industry; entry of multinational media corporations and their cultural products; and systematic development of islands of consumerism amid a vast sea of poverty.

Little wonder that, far from becoming more integrated and prosperous, the world economy is today even more starkly divided. By the indices of the World Bank, 45 per cent of the world lives on less than two dollars a day, and the number of the poor worldwide has grown during the 1990s. A third of the world’s labour force is unemployed or underemployed because of the economic order ruling today. At the same time, in 1993, the top one per cent of the world’s population received a larger share of the world’s income than the bottom 57 per cent; the top five per cent had an income share approaching that of the bottom 85 per cent.1

Distribution has become even more unequal as growth has flattened. Within the wealthy economies themselves growth has slowed sharply in the past two decades compared to the previous two decades. Within the developing countries, the situation is much worse: average income growth per head has sunk to zero during 1980-98.2

While poverty and inequality are not new, the last decade has been specially marked by frequent, devastating financial crises and collapses, which have spread even to economies that were hitherto considered safe. They affected a number of countries at a time, aided by the freeing of financial flows: the East and South-east Asian crisis of 1997-98 — itself involving seven or eight countries — was followed by the Russian collapse of August 1998; Brazil collapsed in August-September 1998, and again in the first half of 1999; in the course of the Brazilian collapse, Argentina’s fragile economy was shaken; it too collapsed dramatically in 2000, and has still not recovered. Instability, bordering on chaos, was the hallmark of the decade. Exchange rates fluctuated more sharply; so too did trade growth, for all the talk of the gains of ‘global integration’. Prices exports of raw materials from the third world fell sharply.

The devastation wreaked by such financial crises was comparable to that of a war. In many cases standards of living in the affected country were thrown back decades — in the case of Russia, by a century (male life expectancy in Russia fell to 57 in the 1990s). In Eastern Europe and the former Soviet Union, almost none of the countries had the same GDP at the end of the decade as they did in 1989. Russia’s GDP at the end of the decade was just two-thirds its 1989 figure; Moldova’s and Ukraine’s were a third of their 1989 figures. Unemployment rates during the Asian crisis tripled in Thailand, quadrupled in South Korea, rose ten-fold in Indonesia.

The imperialist countries, while scrambling to stabilise the financial situation arising from these crises (that is, ensuring continued debt payments by the crisis-affected country), also extracted gains from these devastations. The drop in prices of raw materials exports from the third world slashed costs of multinational corporations. Capital exiting East Asia, Russia and Brazil travelled to imperialist countries (the sums were massive: outflow from Thailand amounted to 7.9 per cent of GDP in 1997; 12.3 per cent in 1998; seven per cent in the first half of 1999 ).3 And as the East Asian, Russian, Brazilian and Argentinian currencies fell, their assets in the public and private sectors were now cheaper for foreign investors to snap up. (The bounty was huge. For example, in the 1990s, even before the latest collapse, multinationals bought up Brazil’s large privatised infrastructure and service sectors; they repatriated $7 billion in profits in 1998 alone.4)

The term ‘globalisation’ is a gross distortion. Labour remains as trapped in national boundaries. Capital, no doubt, is armed with freedom of entry and exit worldwide (allowing it to maximise its exploitation of labour worldwide). But ownership of capital is by no means dispersed over the globe; it is more centralised and concentrated than ever before in imperialist hands.

It was not the working class in the imperialist countries that prospered from these processes. Income inequality in the US is estimated to be at its highest level since the 1930s, and growing steadily worse. The richest five per cent of the US — indeed largely the richest 1-2 per cent — pocketed almost all the gain from the 30 per cent that GDP grew over the 1990s.5 Now Census figures show a sharp upturn in US poverty in 2001. And in Europe, the current drive for economic integration and for greater `competitiveness’ is also in fact a drive to strip the European working class of its rights and social claims.

Resistance to ‘globalisation’ — or rather, resistance to the intensified imperialist onslaught — thus took shape both in the third world countries who were the worst sufferers as well as in the imperialist countries themselves, where the working class faced the onslaught. To tackle such resistance, imperialism has never hesitated to employ repression at home and military suppression abroad. But such measures, while basic, would not suffice; more sophisticated political means are required as well.

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