Globalisation is no cure for world's ills

It used to be the fashion of economists to shower paeans of praise on globalisation as the panacea for world's ills.

The so-called Washington Consensus, unilaterally thrust down the throats of hapless economies confronting economic crisis was itself born out of the mindless presumptions that what was good for the industrial countries was equally good for the rest of the world, and the same prescription would equally do for fixing whatever was wrong in whichever part of the world.

The mantra was reduced to the following pithy and peremptory commands: Privatise; abolish subsidies; allow prices to find their level; do away with exchange controls; make capital accounts fully convertible; unlock every financial and banking institution; let investors of whatever description have the run of the place; liberate the capital markets; pull down all barriers; open the doors; throw away the keys.

The devastating consequences of the shock therapy on these lines administered in 1992-93 to Russia and other countries that comprised the erstwhile Soviet Union, the South Asian meltdown of 1997-98, and the Argentine economic disaster of 1999-2002 exposed the hollowness of the theories to which the Milton Friedmans and Jeffrey Sachs's of the world had doggedly clung till then, and brought globalisation itself into disrepute.

The disparities and discontents stemming from this mad lunging towards chaos were what led to the Battle of Seattle of 1999, in which the assembled Ministers of the World Trade Organisation's member-countries found themselves worsted by nearly 100,000 young protesters with no political affiliations and carrying only knapsacks, sandwiches and drinking water. There had never been a meet of rich nations since then which had not been disrupted by hundreds of thousands of determined crusaders against globalisation.

IMPORTANT FINDING

Any number of books and papers published in the period following these catastrophic events have ascribed them squarely to the unthinking application of half-baked nostrums of globalisation.

The most powerful and influential among the writings was the book Globalisation and Its Discontents by Joseph E. Stiglitz, who was at one time the Senior Vice-President and Chief Economist of the World Bank and the recipient of the Nobel Memorial Prize in Economic Sciences.

It was by far the strongest indictment of the inequalities engendered by globalisation.

In short, globalisation and the inter-connectivities that it was supposed to have brought about are now heavily discounted. Its sheen has worn off.

The most important finding of the last two decades is that only the destructive contagion of the wrong policies and reckless adventurism – whether resulting from sub-prime mortgage manipulations, market distortions, unfair trade practices, skyrocketing deficits and debts requiring astronomical bail-outs, or other machinations traceable to human greed -- had been getting globalised, starting from the US and spreading to Britain, the Euro zone and Japan.

The lesson is clear: The more a country insulates or delinks itself from globalisation, and the more guarded it is in integrating its policies and approaches with global trends, the greater will be its maneuverability in avoiding the ill-effects of globalisation.

This is especially in the form of a slow-down in the efforts directed at poverty elimination, import of unhealthy manufacturing, engineering and labour practices, induction of inappropriate and unsuited technologies, and robbing the country concerned of its competitive advantages and converting it into a high cost economy in which the prices of items of daily consumption become unaffordable.

India has been able to moderate the severity of the recent financial crisis that has enveloped the industrial countries precisely because of its independent and cautiously calibrated economic, financial and monetary policies.

These, again, were made possible by its huge domestic market, the expanding and diversified rural demand consequent on the rising trajectory of rural development and the fact of its low proportion of export and foreign investment compared to the overall size of its economy.

There is increasing recognition in recent writings of economic analysts of the impressive features of the Indian model of economic management.

Only, India's policy makers and economic players should have the courage of conviction to stick to that model without falling for the will-o'-the-wisp of globalisation and getting mired in its potentially debilitating after-effects.

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