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GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm2 of 25 16/03/2012 21:46by the idea of a 'New World Order' in which, after the death of 'Communism', capitalism advances underUS guidance, globalisation theory has become a celebration of liberal capitalism. In the words of YukutaKosai of the Japan Centre for Economic Research, there has been 'a global shift' towards prosperity. 13 Toquestion the core assumptions underlying globalisation is to question these principles--and much of therationale for the world system.Capitalism involves a restless search for profit by a class prepared to mobilise all means to pursue its endsand willing to elaborate all manner of rationales for its activities. In response to the world crisis of the1920s and 1930s, for example, its ideologues abandoned a commitment to the free market in favour ofhighly restrictive state-based policies which willing academics soon justified with complementary theories.Such a turn is again possible but it is proving difficult for the globalisers to abandon ideas which have beenpresented both as a means of understanding the world system and as the blueprint for its future. InSeptember 1998 the British economic journalist William Keegan reported on meetings of the Group ofSeven (G7, the leaders of the seven dominant capitalist states) called to discuss problems of worldrecession. He noted their confusion and that of international financial officials, quoting one who admitted,'We are worried. We are talking like mad to one another. But we haven't a clue what to do'. 14 Under suchcircumstances the globalisers are reluctant to desert their faith. Privately, noted Keegan, officials at the G7summit recognised 'growing disillusionment with what "globalisation" has brought to some countries'. Atthe same time, such officials were not ready to abandon the orthodoxy: 'there are no signs yet of anythingapproaching a change of heart'. 15Academics who have criticised the theory show the same reluctance to question its key principles. On theone hand, it has become fashionable to recognise the 'downside' of globalisation. In a typical recentaccount, Nicholson writes, 'Globalisation has done little to remedy the big discrepancies in wealth in theworld and may well have done things to make it [sic] worse'. 16 On the other hand, such 'revisionists' arguethat globalisation is well under way or is accomplished, alleging that those who question the theory areunwilling to recognise changes in the world system: the expansion of market forces, the free movement ofcapital, and the enfeebled condition of nation states. They also stress the novelty and inevitability of thesechanges: for Gray, for example, 'The world historical moment we call globalisation has momentum that isinexorable'. 17In fact, the globalisation thesis as a whole is suspect. Investigation of the world economy today reveals asituation plainly at odds with the globalisers' main principles. Although some areas of the world economyshow evidence of more fluid capital movement, some do not. Although, in one sense, there has beenintegration--nowhere is immune from the market economy--some regions formerly central to worldcapitalism have been driven to its margins. Some states are weak--but only in relation to very strong stateswhich continue to dominate world affairs. The picture is one of unevenness and of contradiction. Thenotion that human beings are passive in the face of relentless economic and technological change is alsofalse--as the upheavals in South East Asia have demonstrated. But most of its partisans remain firmlyattached to the notion of globalisation. Their views are so much at odds with world realities that theyshould not be viewed merely as misunderstandings but as ideological constructions: ideas mobilised tojustify and to perpetuate relations of exploitation and to assist in containing collective responses frombelow.Global market'Utopians': Recent attempts to modify globalisation theory attempt to rescue the perspective from itsradical and Marxist critics, alleging that they focus on the wrong issues. Gray, for example, argues thatsceptics have attacked only 'hyper-globalisation', what he calls 'the McKinsey worldview--the view ofthings propagated by American business schools'. 18 He continues:No one except a few Utopians in the business community expects the world to become a true singlemarket, in which nation states have withered away and been supplanted by homeless multinationalcorporations. Such an expectation is a chimera of the corporate imagination. Its role is to supportthe illusion of an inevitable worldwide free market. 19

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm4 of 25 16/03/2012 21:46'Wastelands': These approaches are not the ideas of cranks from which more perceptive theorists ofglobalisation can now distance themselves. They are views widespread among theorists of globalisationwhich should be made to stand against the realities of the international political economy and thecondition of humanity worldwide.Rather than exercising new powers as consumers, billions of people are being forced to the very marginsof the world system where notions of taste, choice and assertion of status must be measured against theimperative of survival. Over the past 30 years there has been a very rapid increase in global inequality.This is crudely estimated by the United Nations, based on differences between homogenised 'developed'and 'developing' nations. As we shall see, this is an inappropriate means of understanding world inequalitybut it does give 'headline' figures that stand starkly against the globalisers' account. Between 1960 and1994 the gap in per capita income between the richest fifth of the world's people (most in developedcountries) and the poorest fifth (most in developing countries) more than doubled--from 30:1 to 78:1. Bythe mid-1990s this trend was becoming more marked: by 1995 the ratio was 82:1. 33In 1997 the richest fifth of the world's people obtained 86 percent of world income; the poorest fifthreceived just 1.3 percent. Some 1.3 billion people subsisted on less than $1 per day--a life threateningdecline in living standards since the 1960s. The trend was also accelerating: by 1996 no less than 30countries showed an annual decline in the Human Development Index (HDI), which measures literacy, lifeexpectancy, and access to health services, safe water and adequate food. Among 147 countries defined aswithin the 'developing' world, 100 had experienced 'serious economic decline' over the past 30 years. 34BASIC DEVELOPMENT INDICATORS--SELECTED COUNTRIESHuman Development Index(HDI)*GDP per capita (US$)1970 1995 1970 1995US 0.881 0.943 14,001 20,716UK 0.873 0.932 8,463 13,445S Korea 0.523 0.864 967 5,663Malaysia 0.471 0.834 1,001 3,108Brazil 0.507 0.809 2,049 2,051Egypt 0.269 0.551 338 726India 0.254 0.451 245 425Zambia 0.315 0.378 440 257Senegal 0.176 0.342 723 661Haiti 0.218 0.340 333 231Gambia 0.107 0.219 240 274Niger 0.134 0.207 554 275Sierra Leone 0.155 0.185 222 171*HDI is calculated using figures for life expectancy, educationalattainment (adult literacy and combined primary, secondary andtertiary enrolment), and standard of living (measured throughadjusted income).[Source: UNDP, Human Development Report 1998 ]Some regions of the Third World, says the UNDP, have become 'economic wastelands'. 35 Most countries ofsub-Saharan Africa are far behind the base growth level of 3 percent over a generation which is identifiedas necessary to reverse current trends to greater mass poverty. By 2030, the UNDP estimates, world GDPwill more than double but Africa will experience a further sharp decline in its share of the world total:from 1.2 percent in 1997 to 0.4 percent. 36 The majority of Africans--some 500 million people--will befurther marginalised within an increasingly productive world system.Countries defined by the World Bank as being 'middle income' or 'upper middle income', and by the UN asshowing 'high human development', have also shown a steep decline in living standards. In Latin America,long regarded as a relatively advanced region, the number of people living in poverty increased between1990 and 1995 from 183 million to 230 million, or 48 percent of the continent's population. 37 In 1994 the

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm5 of 25 16/03/2012 21:46UN's Food and Agriculture Organisation (FAO) estimated that 59 million Latin Americans were sufferingchronic hunger. 38 In Asia, 40 years of growth among the Tiger economies had made them models formainstream development strategists. Even before the meltdown of 1997, however, the World Bank noted'a consistent pattern of poverty throughout the region', pointing out that a billion people lived below thepoverty line, including over one third of the population of China. It also noted that inequality in a series ofcountries, especially in South East Asia, was becoming much more pronounced. 39 In October 1998 theUnited Nations Children's Fund (Unicef) reported that malnutrition in some parts of the region, notablyThailand, Indonesia and Malaysia, had reached proportions hitherto associated only with 'the benchmarkof poverty--Africa'. 40 The Philippines government pleaded for massive aid from Western governments,arguing that that for the first time in 20 years, 'the war against poverty...is being lost [sic]'. 41 Even theSingapore government, which has long suppressed all 'bad news' stories, warned of the implications ofunemployment and deepening poverty in neighbouring Indonesia, quoting estimates that half theIndonesian population of over 200 million would be below the poverty line by the end of 1998. 42In the worst affected regions such as the Horn of Africa and parts of West Africa, attempts to stimulateeven basic development have largely been abandoned. Cox comments:The perception that much of the world's population is not needed by the global economy seems tohave been recognised implicitly (though never openly) by the principal world institutions. Policiesto promote economic development have been very largely displaced in favour of what can becalled global poor relief and riot control. 43In these regions some states do not even feature in research programmes upon which organisations such asthe UN base their analyses. Somalia, for example, has simply disappeared from the usually comprehensiveUNDP reports.Class: Inequalities are now so stark that even the UNDP recently reported the findings of ForbesMagazine, the US business journal, which in 1997 identified 225 people worldwide as having combinedwealth of $1 trillion. Of these ultra-rich, over 60 percent were based in the most advanced industrialcountries, including Japan. Of the rest, about half were based in Asia, a quarter in Latin America and theCaribbean, and the rest in Arab states, Russia and Eastern Europe. Two of the 225 were from Africa--significantly from South Africa. 44 Although these figures show the usual weighting towards developedcountries, they also show accumulation of wealth in the developing countries on a scale which wasunthinkable during the colonial era.Countries viewed as closely integrated into the most dynamic sectors of world economic activity showmassive disparities of income. Panama is the location of a key artery of the world trade system and iscategorised by international agencies as within the elite of developing countries. While the richest fifth ofthe population enjoys annual average per capita income of $17,611, the poorest fifth earns on averageonly $589. Over 25 percent of the population is below the internationally defined poverty line of $1 a day.At the other end of the scale, in Senegal, categorised within the group of least developed countries, therichest fifth have average per capita incomes of $5,010; the poorest fifth have a mere $299. 45 In nearbyGuinea-Bissau, the figures are $2,533 and $90 respectively. Here 87 percent of the population attempts tosurvive on less than $1 a day and 40 percent are below the less testing local poverty line. 46All available evidence suggests that inequality is becoming much more pronounced. During the 1960s thepoorest 50 percent of people in Brazil received some 18 percent of national income; by the mid-1990s thefigure had fallen to 11.6 percent. 47 In Egypt, where the regime has been a Third World pioneer ofneo-liberal economic strategies, 23 percent of the population was estimated to be below the poverty linein the late 1970s; by the early 1990s the figure had risen to over 40 percent. 48The human experience, far from being universalised by market forces, is more differentiated than ever.For billions of people the idea of choice, consumerism and 'value commitment' brought by a global era isfantasy. In fact, the recent phase of supposed global advance has brought increased suffering anduncertainty for far longer than the Great Depression of the 1920s and 1930s.

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm6 of 25 16/03/2012 21:46Combined and uneven developmentMarx and the world system: We require an approach which can make sense of the partial andcontradictory character of change. Such an analysis is to be found in theories of development pioneeredby Marx and which were refined by Trotsky in the early years of the 20th century. Together with Marx'stheories of the circulation of capital and of capitalist crisis, they allow an understanding of the dynamicsof today's world system. They also make central the social forces that bourgeois theories includingglobalisation make irrelevant: the masses of the exploited worldwide.The description of capitalist expansion by Marx and Engels in The Communist Manifesto captures thedriven nature of the bourgeois project and its global implications:The need of a constantly expanding market for its products chases the bourgeoisie over the wholesurface of the globe. It must nestle everywhere, settle everywhere, establish connectionseverywhere...The bourgeoisie has through its exploitation of the world market given a cosmopolitan characterto production and consumption in every country... All old-established national industries havebeen destroyed or are being destroyed. They are dislodged by new industries, whose introductionbecomes a life and death question for all civilised nations, by industries that no longer work upindigenous raw material but raw material drawn from the remotest zones; industries whoseproducts are consumed, not only at home, but in every quarter of the globe. In place of the oldwants, satisfied by the productions of the country, we find new wants, requiring for theirsatisfaction the products of distant lands and climes. In place of the old local and nationalseclusion and self sufficiency, we have intercourse in every direction, universal interdependenceof nations. 49Marx, Engels and their co-thinkers anticipated that the expansion of capitalism from Europe wouldproduce steady progress towards capitalist relations across what they called the 'colonial world'. Initiallythey expected that the immense economic and political weight of capitalism in the West would stimulatethe growth of local capitalist classes, overwhelming rulers whose privilege rested upon pre-capitalistrelations. As they wrote in The Communist Manifesto, 'The cheap prices of its commodities are the heavyartillery with which [capitalism] batters down all Chinese walls'. 50 In India, where British rule was bringingrapid change, Marx commented that England had 'a double mission...one destructive, the otherregenerating--the annihilation of the old Asiatic society, and the laying of the foundations of Westernsociety in Asia'. 51 The colonialists' were wholly self serving and, according to Marx, their methods were'vile', 52 but in India he observed that they were transforming a largely rural society in ways that eventuallywould have positive outcomes. Atomised, self contained village communities were being brought togetherby railways, the telegraph and the centralising impact of a British army and administration. In the courseof time, social forces capable of revolutionising Indian society would emerge, producing 'the only socialrevolution ever heard of in Asia'. 53Marx expected that this process would be general and that capitalism would spread worldwide, integratingevery region into the system of commodity production. It would thus create the material, social andsubjective conditions which would allow mankind as a whole to achieve revolutionary change and aclassless society. In this perspective all countries would pass through the stages of development which hadbeen witnessed in Europe, involving a relatively slow (though often traumatic) progress towards industrialcapitalism--what might be termed (although Marx did not use the word) an 'even' development of theworld system. As Marx spelt it out in the preface to Capital, 'The country that is more developedindustrially only shows to the less developed the image of its own future.'But this was not a one dimensional attitude to capitalist progress. During the European revolutions of1848 Marx and Engels had observed the 'indecision, weakness and cowardice' of parties of thebourgeoisie. 54 This confirmed their notion of the 'permanency' of revolution, in which the most energeticand intransigent agents of change were the proletarians. Subsequent events gave them cause to modifyfurther their approach to the bourgeoisie at a world level. The European experience was not simply

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm7 of 25 16/03/2012 21:46reproduced worldwide, Marx noted. Colonial powers faced hostility from subject populations, to whichthey responded with savage repression. Capitalism could not even accommodate the aspiration forindependence expressed by embryonic local bourgeoisies, which were not permitted to emerge as anindependent force. Put another way, everywhere the bourgeoisie was weak and uncertain, and could notfulfill its 'historic tasks' of capitalist development. In the case of India, Marx noted, the interests of themasses would be best served by proletarian revolution in the West, or by an indigenous movement inwhich 'the Hindus themselves shall have grown strong enough to throw off the English yoke altogether'. 55This recognition of more complex and contradictory patterns of change was taken further in Marx's laterwritings. He suggested that in Russia, also a 'backward' country in which the embryonic capitalist classwas weak, it might be possible to accelerate capitalist development. He observed that the Russian statehad already implanted advanced industrial methods within a basically agrarian society, noting that 'thestate has fostered a hothouse growth of the branches of the capitalist system'. 56 These observations weremade as part of a debate with Russian populists which focused on other issues but reveal that Marx hadbecome aware of processes by which, in non-industrial countries, changes introduced by capitalism couldresult in novel patterns of change. The most important of these was the co-existence of an 'implanted'modern industry with the traditional rural economy.Trotsky's insights: Following the revolution of 1905 Trotsky made a far fuller analysis of developments inRussia. He focused upon the rapid growth of industry. This, he noted, had not emerged only or evenmainly as the result of change pioneered by an indigenous capitalist class like those which hadrevolutionised society in Western Europe. Russian industry was largely of foreign origin and, encouragedby the Tsarist state, it had been implanted in the form of the modern, capital-intensive enterprise. Henoted that 'capitalism in Russia did not develop out of the handicraft system [as in Europe]. It conqueredRussia with the economic culture of the whole of Europe behind it'. 57 He continued, 'European capitalprojected its main branches of production and methods of communication across a whole series ofintermediate technical and economic stages through which it had to pass in the countries of origin.'Change in Russia had therefore been abrupt: 'In a short period [European capital] converted a number ofold archaic towns into centres of trade and industry, and even created, in a short time, commercial andindustrial towns in places that had been absolutely uninhabited'. 58Trotsky described a process in which modern factories, transport systems and administrative structurescoexisted with traditional practices: huge steelworks and engineering plants could be found alongsidefields in which peasants still used the hoe. The pattern of development was uneven, combining the mostadvanced methods with traditional techniques, and producing centres of modern industry which wereenclaves within a predominantly agrarian society. Trotsky observed that a journey from the countryside tothe city could take peasants directly from the traditional context to the modern, from the isolation of ruralcommunities to workplaces in which a new collective, the proletariat, was being established as a class withheightened expectations of change. He spelt out the revolutionary consequences, most importantly thatthe new working class had become a more coherent and powerful force than any other in the society,including the weak local bourgeoisie, and was destined to lead the struggle for socialist revolution. Thiswas the basis for Trotsky's theory of permanent revolution, dramatically confirmed during the RussianRevolution of 1917.Uneven development today: Throughout the 20th century, change in Africa, Asia and Latin Africa hasbeen marked by a similar pattern of combined and uneven development. No region is untouched bymarket relations but these have not propelled societies steadily towards growth. Rather there are patternsof extreme unevenness. These are expressed, for example, in the 'megacities' of the Third World, in whichmodern industries have drawn in millions of former peasants to establish a new proletariat. At the sametime, they are home to vast numbers of urban poor and to migrant labourers and semi-proletarians whomay have a stake in the rural economy as well as in the city. Such cities also express the yawning gapwhich has emerged between the new bourgeoisies of such countries and the mass of the exploited,captured in the presence of five star hotels offering haute cuisine alongside slums in which vast numbersof people struggle for survival. Jakarta, Calcutta, Rio, Cairo, Bombay, Istanbul, Shanghai, Lima, Caracasand many others bear witness to the real outcome of changes in the world economy.

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm8 of 25 16/03/2012 21:46In most regions, change was at first associated with intrusion of Western capital. Later local bourgeoisiesdeveloped greater coherence and ambition but even in the post-colonial period they have remained juniorpartners in the imperialist system. Today some are little more than parasitical groups which share revenuefrom processing of local raw materials: the Gulf ruling classes, for example, are rewarded by the oil majorsfor guaranteeing access to the oilfields. Other ruling classes have made complex, sustained interventionsin the local economy, largely through structures of the state. This is in general the case in the NewlyIndustrialising Countries (NICs)--a handful of states in which there has been relatively rapid industrialgrowth. They include Brazil, Argentina, Mexico, India, and the more celebrated East Asian 'Tiger'economies--South Korea, Taiwan, Hong Kong and Singapore. Alex Callinicos comments of the NICs:They are...cases of the process of uneven and combined development analysed by Trotsky in TsaristRussia at the time of the 1905 revolution. They combine in equal measure 'advanced' and'backward' features--advanced industry and authoritarian politics, a modern proletariat and greatpools of misery and poverty. It is this combination which makes them liable to huge social andpolitical explosions. 59One feature of change in the Third World which has invariably puzzled bourgeois analysts has been thelevel of engagement of urban populations and especially of the working class. Among a host of examples,the Chilean events of 1970-1973, the Iranian revolution of 1978-1979, the struggles in South Africathroughout the 1990s, and the Indonesian upheaval in 1998, have all demonstrated the specific weight ofthe proletariat within societies still regarded as in the process of development. Trotsky's analysis of classrelations within the process of combined and uneven development has proved prophetic.The NICs are examples of capitalist advance, but the unevenness of the world system has also producedthe contraction and collapse of local economies. All states are subject to problems of world crisis butthose most distorted by the world system are especially fragile. Thus, where capital has penetrated acountry or region in order to extract specific raw materials or to use local resources for processing,changes in the world market or in local conditions can produce very rapid decline. In the mid-1970s, twothirds of exports from Chad were cotton; two thirds of Chile's exports were copper; and two thirds ofGhana's exports were coffee. In the same period, almost three quarters of Congo's exports were timber; asimilar proportion of Cuba's exports were in sugar; and of Liberia's in iron ore. 60 Like scores of othercountries, they faced immense difficulties during the world economic crisis of the mid-1970s. In somecases, local revenues declined precipitately. In Zambia, where the state had obtained half its income fromthe copper industry, a fall in world prices meant that by 1977 its receipts from this source had declined tonil, with catastrophic consequences for a population soon deprived by the state of subsidised basic foods. 61During periods of world recession, some vulnerable regions can be pushed to the margins of the system.Throughout the 1970s and 1980s countries of the Horn of Africa faced increased difficulties. They had notbeen exploited intensively for mineral or agricultural riches and were of little concern to the centres ofworld power. When wracked by repeated famines, mass movements of population and dislocation ofeconomic and social structures, local states became highly unstable and by the early 1990s one state,Somalia, had collapsed. This produced a spectacle which might be a metaphor for world development:while millions starved in Somalia, in nearby Saudi Arabia, long exploited for its oil resources, billions ofdollars were being mobilised to safeguard Western interests. There have since been further collapses inWest Africa, where a series of local economies have become increasingly fragile and where in themid-1990s the Liberian state disintegrated. Worldwide, more and more regions face such prospects.The theory of combined and uneven development embraces change at a world level: it takes from Marxthe notion of capitalism as an expanding system which draws in and integrates all countries, albeit in waysthat Marx had not at first anticipated. It is a global perspective--but not one of 'globalisation'. It does notspeak of positive integration by the market but of unevenness, inequality and asymmetry. Rather thanharmony and increased prosperity we have more of instability, conflict and needless suffering. And ratherthan a passive population ready to accept its allocated role in global consumerism we have increasinglylarge and energetic political collectives, above all a more assertive working class.

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm9 of 25 16/03/2012 21:46Global capitalForms of capital: The theory of combined and uneven development provides a framework forunderstanding the pattern of world development. But just as Trotsky relied upon Marx's economic theoriesto explain the dynamics of Russian capitalism, so it is necessary to mobilise Marx's approach tounderstand recent developments in the world economy, especially the increased inequalities between theWest and the Third World, and within Third World societies, that the globalist account conceals.Marx's approach to the circulation of capital is vital to this task, especially because of the globalisers'insistence that capital flows are the key element in making a more equitable world. In classical economicsand its contemporary variant, neo-liberalism, capital is essentially unitary, expressing itself as money,investment or profit and growing by virtue of entrepreneurs' energy in exploiting opportunities offered bythe marketplace. In the globalist perspective, capital flows worldwide as the result of direct investment bycompanies and individual entrepreneurs, of activity on stockmarkets and commodity exchanges, and ofinitiatives taken by banks and finance houses. It is the change in volume and speed of capital transfersthat makes for the more even distribution of capital and hence for globalisation.Marx argued that capital can take different forms. He suggested that capital is not unitary, nor does itexpand 'naturally' through the alchemy of the market. Rather, as he explained in Volume 2 of Capital, itsform depends upon the human relationships involved in its mobilisation. Thus money and commoditycapital are expressions of capital in circulation. Each, however, has its origins in productive capital, thatwhich results from the direct exploitation of human labour. As Chris Harman insists, 'The point isimportant--money-capital often seems to be the "pure" form of capital, the form in which the selfexpansion of value is most vividly to be seen. But like the other forms of capital, it is in reality, as Marxput it, "not a thing but a relation", a relation which involves the exploitation of people at the point ofproduction'. 62Identification of different forms of capital does not mean that they exist wholly independently: the processof accumulation involves many changes from one form to another. Production, which is at the core of thecapitalist economy, requires that money-capital is used to buy machinery, materials and labour; andproduction itself brings into being commodities, which are in turn exchanged for money. But money canbe moved through the system far more quickly than capital in form of material objects--machines,production lines, transport systems, etc. This is especially important in the context of credit. Banks andfinance houses have emerged through the efforts of capitalists to benefit from situations in which theyhave profit to invest--but not necessarily enough to invest immediately in productive projects such as newfactories or machinery. They may therefore lend what they have in hand to other capitalists, usuallythrough banks. When they need to mobilise large sums they apply to banks for loans. In effect, the loan isan advance to the capitalist on the expectation of later realisation of surplus value through directexploitation. It is in this context that speculation takes place, as capitalists gamble on anticipated profits,often using credit, and hoping to drive up prices in the process.The distinction between forms of capital is of special significance in periods of slump. Faced with thisprospect some capitalists may mobilise more of their resources in the form of money or commoditycapital. This must be moved through financial networks based on banks, stockmarkets or commodityexchanges but does not require the relatively complex and stable sets of relationships associated withproductive capital. Above all, it does not require the elaborate social and political systems within whichaccumulation of surplus value from human labour is accomplished. This helps to explain why a worldeconomy which, at one level, is integrated by movements of money, becomes increasingly prone todestabilisation. It also explains the glaring contradictions associated with general movements of capital:how at one level such movements may prompt integration but at another level may have the effect ofintensifying unevenness within the world system.Financial capital: Even orthodox economists have recently become alarmed by the disproportionbetween what they call the 'paper' economy--debt--and 'fundamentals' such as growth in output. Druckerwarns, 'Ninety percent or more of the transnational economy's financial transactions do not serve what

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm10 of 25 16/03/2012 21:46economists would call an economic function'. 63 And Cerny comments that 'the financial economy calls thetune for the real economy'. 64 The suggestion that capital is not unitary has implications for the wholenotion that increased flows of finance have been fundamental to the making of a globalised world. 65 It isespecially relevant when we consider the place of Third World economies within the wider system.Movements of capital in the form of money and of commodities have increased greatly in volume andspeed over the past 30 years. Axford sums up the approach of many theorists by depicting thisdevelopment as 'the most unequivocal indicator of the globalisation of economic affairs'. 66 In 1976borrowing on international capital markets amounted to $96.6 billion; by 1993 the figure had reached$818.6 billion. 67 In addition, during the 1980s, markets in 'derivatives', speculation on interest rates andexchange rates, increased from a few hundred billion dollars annually to some $8,500 billion. 68 By 1995the daily volume of business on the world's currency markets had reached $1,500 billion--a figure whichexceeded the annual gross domestic product of all but three of the world's economies. 69Stopford and Strange describe the new environment in which these huge volumes of capital have becomeincreasingly mobile:Instead of a system of national financial systems linked by a few operators buying and sellingcredit across the exchanges, we now have a global system, in which national markets, physicallyseparate, function as if they were all in the same place. The balance has shifted from a financialstructure which was predominantly state based with some transnational links, to a predominantlyglobal system in which some residual local differences in markets, institutions and regulationspersist as vestiges of a bygone age. 70The new system, it is argued, has been made possible by rapid advances in communications technology.The Financial Times has observed that, because of these, banking 'is rapidly becoming indifferent to theconstraints of time, place and currency'. 71 Changes in means of data transfer are often viewed as thedefining expression of financial globality--a world 'wired' for integration between its banking centres isdepicted as one already unified. It is in this context that Waters concludes, 'Elimination of space hasaccomplished the conquest of time'. 72 Such a notion of integration through financial flows has been aprimary influence on theories of globalisation. In a revealing remark, Cerny suggests that today 'the worldorder follows the financial order'. 73These comments reflect the conviction of many globalisation theorists that world integration is a productof the autonomous functioning of modern technologies. In a typical observation, Gray notes, 'We are notthe masters of the technologies that drive the global economy: they condition us in many ways we havenot begun to understand'. 74 On this view, it is the power of digital systems that makes for integration ofworld finance. Such an approach offers no hint of why such means have been mobilised; in particular itignores the initiatives taken by leading financial institutions to put new technologies to the service ofprofit.In the 1970s many banks attempted to counter the problem of holding funds which were 'idle' due torecession in the West by lending to Third World countries. This was an effort to counter one manifestationof a general problem--the systemic tendency of the rate of profit to decline. It ended in near disaster, asMexico defaulted, prompting the IMF to step in and rescue its financial institutions. 75 Banks werecompelled to look elsewhere for means of maximising profit and there was a general turn towards'securitisation'--selling shares, options and other forms of marketable 'paper' (including government debt)on stockmarkets worldwide. As banks moved more fully into these activities they pressed into service thetechnologies of communication which were just becoming available: integrated systems of computers,telephone lines, TV, and satellite links which allowed almost instantaneous transfers of funds, quickspeculative gambits and rapid profit taking. 76The capacity to switch money at speed through global networks did not mean that the relationshipsmediated by money changed, however. Despite an appearance of 'indifference' to place, the mass oftransactions were conducted within and between traditional financial centres such as New York, London

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm11 of 25 16/03/2012 21:46and Tokyo. Even by the late 1980s over half of all 'stateless' currency--known as the Eurodollar--circulated within the US, principally among New York institutions that had dominated the money marketsfor decades. 77 And although penetration of finance capital into the Third World is now much deeper thanhitherto, today's 'emerging markets' are often dominated by institutions which are direct descendants ofbanks and finance houses of the colonial era.At the same time, large volumes of capital have been moved through new banking centres in the ThirdWorld, especially in East Asia and South East Asia, and globally organised speculative activities nowaffect profoundly many African, Asian and Latin American economies. Again, this is not an entirely noveldevelopment: during the colonial era bankers played a leading role in advancing European economicpenetration of the Third World. In the post-colonial period many independent states then introducedcontrols, providing some insulation from capital movements in the wider market. But these measures werein turn reversed during the drive for deregulation which from the 1980s exposed such countries to morepowerful flows of finance and to voracious profit seeking.By the 1990s many countries which had been closed to international speculative activities were appearingon 'emerging markets' listings. In 1994 Emerging Markets Investor magazine detailed 51 emerging capitalmarkets in which securities could be traded; it also commented that 'many of the markets currentlyinaccessible can be expected to open up before long'. 78 Within such markets all manner of institutionshave been at work: in Egypt, for example, in 1995 only a handful of international financial operators wereactive; by 1997 some 714 foreign mutual funds had entered the local market, even though by worldstandards it traded a tiny volume of stocks. 79Although external financial involvement in many countries may be modest on the world scale, it may bevery significant in the local context. This becomes apparent as the level of exposure to financial flows isincreased, especially when Third World countries open stock exchanges or other markets on which arange of securities can be sold. Transnational movements of finance do not operate through the evenlyintegrated 24 hour global marketplace depicted in globalisation theory but through a series of interlinkednetworks--what management consultants McKinsey call 'distinct world markets for each type ofinstrument...depending closely on the complex nature of the risks which determine the price of eachinstrument in different countries'. 80 Markets in countries as diverse and physically distant as Bangladesh,Columbia, Ghana, Kenya, Pakistan, Peru and Vietnam have been drawn into these networks ofspeculative activity focused on short term profit taking. The result has been greatly increased vulnerabilityto speculators who make finely calculated judgements about each financial gambit, moving immensevolumes of capital against local currencies and tradeable securities.In 1997 the Malaysian ringitt and Thai baht dropped precipitately after evidence of local vulnerabilitiesproduced huge outflows of money. Neighbouring states such as Vietnam and the Philippines, which wereless exposed to the international markets but well integrated into the regional economy, also experiencedsteep falls in the value of their currencies and turmoil on their stockmarkets. There was a flood of moneyout of the region, mainly to secure 'home bases' in Europe, the US or Japan. 81Such is the fragility of many Third World currencies and local markets that specific local collapses canspread rapidly through financial networks, producing a 'contagion' effect. In August 1998 financial crisis inRussia prompted a collapse which the Financial Times said would cause developing markets in general to'disappear into a black hole'--Third World currencies and stocks having become 'so much nuclear waste'. 82Domestic interest rates in Brazil promptly rose to almost 50 percent and over a period of two weeks theBrazilian government spent $15 billion of its $67 billion foreign exchange reserves propping up itscurrency, the real. 83There can be no doubt that transnationalisation of world finance has had a profound effect, mostimportantly in generalising crisis. Thus events in South East Asia and Russia have not just weakenedcurrencies in Latin America but through the 'domino effect' they threaten to subvert whole financialsystems. In August 1998 the Financial Times warned that 'Latin America is on the brink':

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm12 of 25 16/03/2012 21:46The Asian crisis, having swept through Russia, is now engulfing the continent. Its biggest economy,Brazil, is fighting to avoid a currency collapse or a debt moratorium. If it is forced into either, thenext biggest economies, Argentina and Russia, would well follow suit...the economic reforms thatopened up [Latin America] to the world market after a violent and inflationary decade will be atrisk and so could the 'Washington consensus', the idea that economic modernisation is bestperformed by liberalising goods and capital markets. 84While predatory activity across the world has intensified, longer term involvement of major banks withthe Third World has greatly diminished. 85 Lending has been directed to a small number of countries,notably to those in East Asia dubbed the 'Dragon' economies, which were said to be following the exampleof the East Asian Tigers and transforming themselves into industrialised states organised on uninhibitedfree market principles. In the first half of 1998 alone, international banks lent $32 billion to countries inAsia, overwhelmingly to those in East and South Asia which were already showing what the FinancialTimes called (with some understatement) 'signs of strain'. 86 Speculative lending to Thailand, for example,had proved a key factor in precipitating a general economic collapse in 1997. 87 Meanwhile, less favouredeconomies elsewhere have become more dependent upon government borrowing, and upon programmesorganised by the World Bank and the International Monetary Fund which continue to impose conditions inline with neo-liberal principles of deregulation, further emphasising local vulnerabilities.'Free trade': The level of world integration through trade is much less pronounced than in the area offinance. It is true that during the long boom world trade grew very rapidly but growth rates have sinceslowed. 88 More important, trade is increasingly organised on a pattern at odds with the globalist notion ofworld integration.In globalisation theory, deregulation is identified as the main means of achieving a free trade network inwhich commodities flow across old protective regimes. But developments among the world's dominanteconomies are not towards an open market model but towards regional links and trade agreements. Judiscomments of the North American Free Trade Agreement (Nafta) of 1992:Nafta is not really about global free trade. It does remove trade and investment barriers amongthe United States, Canada and Mexico, but it retains and erects (in the form of 'rules of origin')barriers between the three countries and the rest of the world.Appearances aside, Nafta is a prudent step towards creating a regional trading bloc that wouldwithstand the devolution of Western Europe and Asia into rival blocs. The treaty's free tradeproponents would never admit this, but Nafta's underlying thrust is toward managed trade andinvestment. 89The notion that formation of such blocs represents a genuine alliance of national capitals must also bequestioned. In the case of Nafta, for example, regionalisation has been driven most strongly by USproducers' desire to gain direct access to the Mexican market. During the late 1980s US exports to Mexicorose rapidly: Kegley and Wittkopf assert that 'Nafta was written to accelerate this growth'. 90 Similarly,consolidation of the European Union (EU) should be understood in the context of the relative strengths ofnational states in the region. As Milward has argued in The European Rescue of the Nation State,Europeanisation is intimately associated with the dynamics of the most powerful of the regionaleconomies, that of Germany. 91Rather than being integrated simply by trade flows, the global environment is also one of new blocs, eachdominated by one or more of the major economic powers of North America, Europe and East Asia--whatSandholz calls 'regional neo-mercantilism'. 92 In the same vein The Economist challenges the idea ofunstructured global interaction, commenting that 'the big trend in the world economy is towards"regionalism" and the reassertion of regional geography'. 93 Such blocs by definition exclude the mass ofstates of the Third World, viewed by the regional alliances as their arena for economic competition. Theexceptions, such as Mexico in the Nafta group, are left weaker as their notional independence isdiminished. Even conservative accounts of the world order confirm this development. As Philips andTucker comment, 'For the developing countries, the prospect of a world divided into separate regional

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm13 of 25 16/03/2012 21:46centres is disconcerting. It leaves too many countries out of the system altogether, and even those itencompasses are left relatively weak as their bargaining power is divided'. 94Third World countries now occupy a more marginal position in world trade. In 1962 the share of'industrial' countries was 63.6 percent and of 'non-industrial' countries 24.1 percent. By 1990 the figureswere 71.9 percent and 20 percent respectively. 95 These figures place the four Asian Tigers in the'non-industrial' group. If the four, which together have a quarter of the 'non-industrial' world's trade, arereallocated to the 'industrial' group, the figures reveal an even starker difference: 76.5 percent of worldtrade among 'industrial' countries and 16.5 percent of trade among the 'non-industrial' countries of theThird World. The picture is one of greatly increased asymmetry; notions of simple world integration oncemore seem implausible.Productive capital and foreign direct investment: In the early 1970s, after 25 years of sustained growththrough the 'long boom', international production seemed to be playing a new role in integrating the worldeconomy. Exchange of manufactured goods became the most dynamic sector of world trade; at the sametime, the internationalisation of manufacturing itself seemed to be breaking down barriers betweennational states. Harris noted, 'The great boom thus tended to wash away what hitherto had been seen asthe clear national identification of production'. 96 Multinational companies (MNCs) were seen as the mainagents of this process. Even by the early 1960s their combined sales were estimated at almost 20 percentof world output of goods and services and economists were beginning to depict a novel globaldevelopment. 97 In fact MNCs had existed since at least the 19th century and their mode of operation wasnot new. What was unexpected was the speed of their growth and the contrast this presented with thepreceding period during which national states and state capital had dominated the world economy.By the early 1990s the largest 300 MNCs accounted for 70 percent of foreign direct investment (FDI) and25 percent of the world's capital. 98 Most MNCs were engaged in extraction, processing or manufacture,the key sectors being petrochemicals, automobiles, consumer electronics, tyres, pharmaceuticals, tobaccoand foodstuffs. They operated enterprises which required long term investment and demandedsophisticated local infrastructures. Most important, they employed tens of millions of workers inproductive activities: that is, the exploitative relationships involved resulted directly in profit for theowners of capital. This places MNC activity in an altogether different category from other perceivedglobalising activities, notably that of finance, where, as Hoogvelt comments, profits 'are based onfictitious capital formation, namely on debt and exponential debt creation'. 99Even the repeated world recessions of the 1970s and 1980s, which deeply affected growth of trade, didnot halt the process of restructuring. This can be seen in the rapid growth of FDI. Hirst and Thompsonnote that during the 1980s FDI grew almost four times faster than world merchandise trade, adevelopment which these two writers--who are in general sceptical of the globalisation thesis--see as 'avery basic change in the nature of the international economy'. 100Chris Harman observes that much of the credibility of the 'globalisation' orthodoxy depends uponperceptions of MNC activity: 'It enables the orthodoxy to paint a picture of capital flowing evenly acrossthe face of the earth, ceaselessly shifting from one spot to another in search of lower wages and higherprofits, with a tendency towards the sprinkling of production facilities uniformly across all fivecontinents'. 101 What is most striking about global investment, however, is that it too reveals a pattern ofincreasingly uneven development. On figures collected by Hoogvelt, until 1960 the Third World receivedabout 50 percent of total world investment; by 1974 this had fallen to 25 percent; by 1988 it had fallen to16.9 percent. 102 Thus during the colonial period, Africa, Asia and Latin America had been important targetzones for investment; as the volume of total investment worldwide increased, these continents becameless significant. FDI involves a much smaller proportion of investment. It grew significantly during the1980s and especially in the 1990s, when the increase averaged 12 percent a year, almost double theincrease in growth of total world exports. 103 By 1996 some 37 percent of total FDI was going todeveloping countries 104 --a statistic that has led many globalisers to conclude that FDI is widely dispersed.In fact, such capital entered only a handful of economies. The World Bank recently confirmed thatbetween 1990 and 1995 just nine of the 147 'developing' countries received 90 percent of all such flows,

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm14 of 25 16/03/2012 21:46the most favoured being China, Singapore, Malaysia, Thailand and Brazil. 105TEN TOP DEVELOPING COUNTRIES FOR INFLOW OF FDI 1981-1992 (US$ MILLION)1981 1986 1989 1992China - 1,875 3,393 11,156Singapore 1,660 1,710 2,773 5,635Mexico 2,835 1,523 3,037 5,366Malaysia 1,265 489 1,668 4,469Brazil 2,520 - 1,267 1,454Hong Kong 1,088 996 1,076 1,918Argentina 837 574 - 4,179Thailand - - 1,775 2,116Egypt 753 1,217 1,250 -Taiwan - 326 1,604 -Percentage share of ten top countries in total inflowsto developing countries:[Source: UNCTAD ]81 70 72 76Hirst and Thompson have correlated FDI with world population structure. They estimate that, even whenmajor population centres such as coastal China are included in the recipient category, countries containingjust 28 percent of the world's population receive 91.5 percent of the FDI. 106 They comment, 'In otherwords nearly two thirds of the world is virtually written off the map as far as any benefits from this formof investment are concerned'. 107This asymmetric pattern is consistent with the regionalisation of FDI within economies of the West.Ruigrok and van Tulder show that almost all MNCs invest more in one country than in any other: that ineffect they operate from a clearly established 'home base' or within a distinct region close to the nationalpoint of origin. 108 This is also consistent with patterns of world trade which show regional networks andthe consolidation of trading blocs. Kiely concludes that 'evidence points to the maintenance, and indeedthe intensification of uneven development in the global economy'. 109Home base: In a recent critique of globalisation theory, Chris Harman comments, 'It is very easy for firmswhich trade internationally to move money internationally. But moving money is not the same thing asmoving productive capital.' He goes on:Productive capital is made up of factories and machinery, mines, docks, offices and so on. Thesetake years to build up and cannot be simply picked up and carted away... Productive capitalsimply cannot be footloose. 110Kiely makes a similar point, that 'capital faces a number of sunk costs, which constitute significant barriersto exit'. 111 He quotes Wade: '[Such costs] include initial start up costs, the costs of learning over time abouta particular environment, and the costs of building, reputation, gaining acceptance among government,employees and other firms regarding their reliability as producers, employers, and suppliers in eachmarket. 112Labour costs are only one factor in decisions about location made by MNCs. Corporate managersroutinely summon up the idea of a globalised labour market in which their workforce must be prepared toaccept the discipline imposed by market conditions. But the idea of global portability of jobs is false. Themost that can be said is that in some labour intensive industries such as clothing, textiles and electronicassembly, fixed costs are lower than in most other sectors and capital is somewhat more mobile.Korzeniewicz has shown, by analysing the activities of footwear manufacturer Nike in East Asia, thatcompanies must balance the gain in lower wages against a host of other factors. He comments, 'Theadvantages of lower labour costs in the developing manufacturing areas [have] to be weighed againstdisadvantages in production flexibility, quality, raw material sourcing and transportation'. 113 In many cases,

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm15 of 25 16/03/2012 21:46relatively high wage locations prove more desirable.These considerations do not mean that companies remain wholly within the national state of origin. Buteven in the late 1990s relatively few have moved outside their regional bases, where they can rely on wellestablished industrial links and infrastructures. Ruigrok and van Tulder conclude that, under thesecircumstances, 'neither individual firms nor states but industrial complexes constitute the centre of gravityof the international restructuring race'. 114 Three such complexes dominate the world economy: NorthAmerica, Europe and Japan. The rest of the world contributes only 19 percent of the sum ofmanufacturing exports and of this total two thirds comes from the Tiger economies, plus coastal China. 115There is no sign elsewhere of the development of major industrial complexes which might relocateproductive capital on a substantial scale. It is on this basis that Ruigrok and van Tulder argue that what isusually called 'globalisation' would be better described as 'triadisation'. 116In this context structures congenial to long term investment of capital are of immense importance. WhenMNCs do invest outside regions of origin the character of the local state is a critical factor and nationstates perceived as stable, with well-integrated infrastructures and mechanisms of social and politicalcontrol, are highly favoured. As Kiely observes, the pattern of FDI worldwide takes place 'because of, andnot despite the state'. 117 There is a corollary: those states without attributes deemed necessary by MNCsare treated with suspicion and few Third World states are considered for serious long term investment.Capitalism is not using the Third World in general as a site for intensified exploitation, it is marginalising it.Globalisation and developmentNICs--road closed: Globalisation theory is not a description of a much changed world. Rather it is theimposition of neo-liberal economic principles upon the reality of an unequal and disordered system: theworld as contemporary bourgeois theory wishes it to be.It is certainly true that the internationalisation of capital has accelerated over the past 30 years. But withinthis process two developments have taken the system in a direction different from that envisaged by theglobalisers. First, a key response to the fall in the rate of profit has been increased speculative activity anda huge growth in financial markets. This has not complemented the growth of productive capital at aglobal level but has diverted investible funds from it, making less likely the emergence of new centres ofcapital accumulation. A second development involves decisions taken by MNCs to develop manufacturingon a regional, rather than a 'global' basis. Emergence of the 'triad' of investment zones has concentratedmore and more of productive capital among networks of advanced economies. These networks areconnected to Third World economies but are not active agents of the latters' development; on the contrary,their consolidation is a vote of 'no confidence' in the Third World. Declining rates of productiveinvestment have left most such economies weak and vulnerable to the currents, eddies and tidal wavescreated by global speculators. The two tendencies have a combined effect of greatly increasing thedevelopment 'gap' between the 'triad' and the NICs, and 'the rest'. They intensify the unevenness of theworld system, relegating to the also-rans even those states in which there were once hopes of modestadvance.These changes mean that the vision of advance towards NIC status is an illusion. In the mid-1980s NigelHarris argued that the experience of the NICs would become more general. The dispersal of capitalworldwide would certainly involve more and more economies, he argued: 'Once the internationalised corewas created, the effects spread outwards, involving increased numbers of less developed countries, so thatthere are new newly industrialising countries--it is a continuing process. It seems inconceivable that thegeneral trend could now be reversed'. 118But the trend has been reversed. What now seems inconceivable is that even among the more stablecountries of Africa, Asia and Latin America there might emerge states able to follow the paths of Korea orTaiwan, which over a generation from the 1940s changed radically, becoming substantial (if junior)industrial capitalisms. Callinicos's criticisms of Harris in this journal in 1987 have proved substantiallycorrect. Emergence of new NICs, Callinicos suggested, would 'depend heavily upon international

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm16 of 25 16/03/2012 21:46conditions reflecting largely the state of the advanced economies' and would be 'limited by the ways inwhich Western capitalists, still the dominant force in the system, respond to the fall in the world rate ofprofit'. 119In effect, capitalism has closed the NIC option for the forseeable future. Its ideologues nonethelessmaintain a double fiction: that industrialisation can be achieved and that the appropriate strategy is basedupon a specific model of the free market NIC. As recently as 1997, one leading US bank published lists ofTigers, Near-Tigers and Tiger Cubs, encouraging Third World governments to believe that they could jointhe developing elite. 120 Many ruling classes remain susceptible to the vision of progress within a'globalised' world, in which pursuit of free market policies on the Tiger model will bring developmentalrewards. In fact, from the 1940s, regimes in the East Asian NICs had followed a state capitalist path toindustrialisation and represent specific and probably unrepeatable cases of rapid capital accumulation inthe Third World. As Harris argued, 'Before the four existed, it had been necessary to invent them in orderto justify [neo-liberal theories]; and after they expanded, not a little invention went into rendering thefacts of their performance consistent with the postulates of the free market'. 121Especially misleading is the notion that in cases of the most rapid advance, notably Korea, the local statewithdrew from direct intervention in economic affairs. On the contrary, the state was (and remains)central: as one account of Korea notes, 'No state outside the Socialist bloc came anywhere near thismeasure of control over the state's investible resources'. 122 The fiction of Korean development hasnonetheless been incorporated into theories of globalisation to make an apparently seamless argument forfree market strategy. Institutions such as the World Bank and the IMF continue to embellish the mythwhile using control over funds to induce Third World governments to move away from protectionism,state ownership and market controls.Such 'liberalisation' was pioneered in the mid-1970s by the Sadat regime in Egypt through its infitah('opening') policy. The regime immediately enriched itself and its supporters through commission agencies,import-export scams, and speculation in property and finance. Within a few years a 'Sadat class' ofnouveaux riches had been accommodated by the ruling senior bureaucrats and army officers of the earliernationalist period. Hinnebusch describes the outcome:The new prosperity widened and solidified the regime's support among those who got the lion'sshare of the benefits, the bourgeoisie. Revitalisation of the private sector created powerfulinterests with a stake in the regime. Contractors, real estate speculators, and merchants flourishedon the economic boom; importers, partners and agents of foreign firms, tourist operators, lawyersand middle men who helped investors against bureaucratic tangles, thrived on the cuts they tookfrom resource inflow... On the other hand, the lower middle and lower classes bore the main costsof infitah while reaping the fewest benefits... The explosion of conscipuous consumption at the topfed a growing perception that class gaps were widening, the rich getting rich and the poorpoorer. 123Twenty five years after the initiation of infitah President Mubarak still talks of creating a 'Tiger on theNile' but sustained industrial growth on the NIC model remains a distant prospect. The story has beenrepeated in scores of states worldwide, as regimes with roots in an earlier era of state-led developmenthave embraced neo-liberalism and launched the inevitable attacks upon living standards, social welfareand upon workers' and peasants' rights.The African crisis: In many poor countries the aim of development policy has been less ambitious--simplyto halt economic decline. In 1991 the UN secretary general commented that Africa was heading for 'anunrelenting crisis of tragic proportions'. 124 But for African states the solution has been the same as foraspiring industrialisers--the implementation of 'adjustment' programmes which aim to create conditionscongenial to private capital accumulation. 125 The outcome has been to intensify crisis: in agriculturalproduction, industrial output, increased deforestation and desertification, rising food imports, decliningterms of trade and capital flight. Sandbrook comments, 'If it were not for the unenumerated andunregulated informal or parallel economy, life [for the masses] would be more even desperate'. 126

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm17 of 25 16/03/2012 21:46The more compliant have been local regimes, the more seriously they have been affected. In 1990Zimbabwe was ranked as a 'middle income' country by the World Bank, above Indonesia, the Philippinesand other states aspiring to rapid advance. 127 With mineral wealth and a relatively sophisticatedagricultural sector it was expected to progress much faster than other African countries. While opposingIMF 'adjustment' programmes rhetorically, the Mugabe regime had implemented them, fulfillingrequirements for aid and development assistance. But during the mid-1990s world prices for Zimbabwe'smain exports, tobacco and gold, fell sharply and investors began to withdraw. In November 1997 therewas a run on the local currency and a collapse in the Harare stockmarket. Food prices soared and weregiven a further upward push when, under pressure from the World Bank and IMF, the Zimbabwean regimeincreased the cost of the main staple, maize, by 24 percent. 128 Following strikes and demonstrationsagainst the increases there was a further collapse as the Zimbabwean dollar--formerly regarded as one ofthe best speculative investments in Africa--halved in value against the US dollar. One report commentedthat in a few months the country had gone from being one of Africa's top performers--'about to achievesustained growth and prosperity'--to 'economic disaster'. 129Zimbabwe suffers from the increased vulnerability which affects all economies 'opened' to the worldsystem. As a corollary, states which have been somewhat less compliant with the IMF, or less effective in'opening', have been punished less heavily. After the collapse of world markets in September 1998 oneinvestment manager in London commented, 'As liquidity has drained out of the emerging markets,countries with relatively little foreign participation and generally illiquid markets have suffered theleast...minor markets...seem to be unaffected by turmoil elsewhere'. 130 While countries such as Somalia,Liberia, Sierra Leone, Sudan, Haiti and Afghanistan are dismissed as 'basket cases' and written out of thedevelopment script, others are penalised for having played their allocated role.At the same time, these very vulnerable countries are being revisited by the problem of debt. This hasoften been viewed as a problem of the 1970s and early 1980s which receded when commercial banksreduced lending. But everywhere except Latin America (scene of the earlier debt crisis) debts to Westerngovernments and multilateral creditors have continued to mount. By the late 1980s the volume of debtwas increasing massively: in 1990 the total stock of debt owed by developing countries was $1.4 trillion;by 1997 it was $2.17 trillion. 131 In Africa by 1997 debt stood at $370 for every person in the continent anddwarfed the annual production of many states. 132 In 1994 Mozambique's debt amounted to 450 percent ofits GNP, that of Congo was 454 percent of GNP, and of the Ivory Coast 339 percent of GNP. 133 Scores ofcountries were similarly entrapped. Despite the increase in FDI to some developing economies, Westernbanks and governments now receive more in interest on debt from the Third World than the MNCs extractin profit--a reversal of the situation in the 1970s. 134 In 1998 Third World countries paid Western creditors$717 million in debt service every day. 135AFRICAN DEBT 1994--SELECTED STATESTotal debt(US$ billion)Debtas % of GNPCongo 5.3 454Mozambique 5.5 450Guinea-Bissau 0.8 340Ivory Coast 18.5 339Angola 11.2 275Dem Rep of Congo 12.3 232Tanzania 7.4 230Madagascar 4.1 225Zambia 6.6 204Sierra Leone 1.4 187Malawi 2.0 160Togo 1.5 157[Source: World Bank, World Development Report 1996]PROFIT AND INTEREST: OUTFLOWS FROM THE THIRD WORLD (US$ BILLION)

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm18 of 25 16/03/2012 21:461970 1980 1990 1994Interest 2.4 35.1 59.4 64.5Profit 6.5 24.0 17.8 25.4[Source: World Bank]With commodity prices falling, and the trade liberalisation of the Uruguay Round of negotiations on tariffsfurther penalising Third World economies, such countries might have expected relaxation of paymentconditions. But in 1998 the US stalled on its Highly Indebted Poor Countries initiative (HIPC). Countriessuch as Tanzania, which was told to wait until 2002 to qualify for promised 'debt relief' under HIPC, facecrushing burdens. According to one aid agency, the country's debt is rising so rapidly that developmentprojects are hardly feasible. A Christian Aid official illustrates a problem which is causing anxiety to eventhe most conservative aid bodies: rigorous enforcement of repayments by the World Bank for borrowingon projects which the institution designed and which could never have achieved its own target results.According to Andrew Simms, 'Tanzania is paying for the World Bank's own mistakes. The money is simplygoing round in circles.' He adds:There's one project in Tanzania for which we borrowed about $9 million. In 1979, that was equalto about 149 million [Tanzanian] shillings. So far we have repaid about $900,000 but that is nowequivalent to 590 million shillings. In local currency terms we have already repaid the debtseveral times. But it just goes up and up. 136What seems incomprehensible to aid officials is that Tanzania has implemented IMF adjustmentprogrammes, as instructed, since the mid-1980s. Among its 'liberalisation' measures, the government hasrepeatedly devalued the local currency, so that by 1998 the shilling was at 1,500 percent less than itsinternational value in 1985. The government now spends $8 for every Tanzanian to service its externaldebt while it spends just $3 annually per person on health. 137 More than 50 percent of the population livesbelow the poverty line.These stark problems have not prevented US strategists restating the global masterplan in blunt terms. In1997 the State Department sent a senior trade official to tell an African summit meeting: 'The corepremises of our plan are that those nations willing and able to pursue the most aggressive growth orientedeconomic policies--principally by opening their economies to the world marketplace--are the ones mostlikely to be the engines of growth on the continent'. 138Global inequalityEnd of the 'Third World'? The notion of a 'Third World' has never been closely defined. As deployed byradical nationalists in the 1950s it was meant to indicate a state directed development path independent ofWestern capitalism and of Eastern state capitalism. This homogenised a vast range of countries; it alsoconcealed class relations within them and the common interests between their rulers and those of the'First' and 'Second' worlds. As such it obscured the workings of capitalism. Since the 1970s the main use ofthe term has been as a shorthand to indicate the gulf between a minority of rich countries and the majorityof poor countries of Africa, Asia and Latin America. As an expression of contemporary world inequalitiesit may then be more significant than hitherto--for such inequalities have become far more pronounced. Inaddition, it is a useful corrective to globalist babble with its imagined universe of happy consumers.In globalisation theory the notion of a Third World is rendered meaningless, for the inequalities it impliesare said to be disappearing beneath worldwide capital flows. This is Nigel Harris's position in The End ofthe Third World, published in 1986, in which he argued that a strong tendency to distribution ofmanufacturing across the globe was transforming relations between rich and poor countries. But neitherthe notion of a globalised world, nor that of a system divided between First and Third worlds (or Northand South) are appropriate ways of depicting world capitalism. The system is best seen as a series ofunevenly developed economic and political structures, including nation states and regions, within whichcapital is mobilised in the constant search for profit.This system is structured by class. It is true that national economies stand in a hierarchy, with Western

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm19 of 25 16/03/2012 21:46capitalist states at the head and a long tail of Third World countries. But this structure depends upon themaintenance of class relations which cross-cut the hierarchy, tying minorities of the wealthy and powerfulin Africa, Asia and Latin America to the centres of world power. The emergence of the NICs in the 1950sand 1960s represented the efforts of capital in a handful of countries to exploit local working classes withenough success to consolidate a stronger position vis à vis other capitals and in effect to climb thehierarchy. The ruling class of South Korea, for example, only accomplished this under uniquely favourablecircumstances and as part of the system of world exploitation. In doing so, it both co-operated closelywith the centres of power and developed its own distinct interests at the expense of the Korean workingclass.The increased internationalisation of capital has made for closer relationships between the subordinateruling classes of Africa, Asia and Latin America, and the centres of world power. The former have largelyabandoned state led development policies in favour of neo-liberal formulas drawn up in Washington,Tokyo and London, which they believe to be beneficial to their interests. But as the outcome of suchpolicies becomes clearer, problems which have always attended co-operation among capitalists (Marx's'band of warring brothers') have started to re-emerge. These have affected the new trading blocs, globalagreements, and local economies and states. There have been a number of preliminary tremors: the US hasbeen unable to drive through its World Trade Agreement; the US and the EU have fallen out over tariffs;and Middle Eastern states promised a new trade deal with the EU have begun to complain bitterly aboutbroken promises. In August 1998 the Financial Times warned of a 'severe protectionist backlash' in theUS which could intensify as businesses dived for cover under the protection of the national state. 139 Butthe real shock has come with repeated currency meltdowns and generalised crisis in South East Asia. Thishas brought the whole economic orthodoxy into question. Former free market fanatic Mahathir Mohamadof Malaysia has blamed 'foreign capital' and 'speculators' for his difficulties and attempted a move towardsautarkic local solutions by banning sales of the ringgit and organising state buyouts of non-performingloans and assets of banks--heresies among his one time friends of the neo-liberal establishment. USfinancier George Soros--a totemic figure for ideologues of globalisation--has attacked Mahathir as 'amenace to his own country'. 140Soros is also in a state of panic, however. To the surprise of the neo-liberals, he has been a leading figurein calling for new structures for supervision of the global market: in effect, he wishes for a global statewhich will guarantee his own worldwide search for speculative gain. Increasingly perplexed by theinstabilities of the world system, he has become a new prophet of global doom, suggesting, 'The collapseof the global marketplace would be a traumatic event with unimaginable consequences. Yet I find it easierto imagine than continuation of the present regime'. 141 Leading US economist Paul Krugman has arguedthat only extensive capital controls can rescue the Asian economies and that urgent action is needed.These formulas are viewed with alarm by fundamentalist neo-liberals. For The Economist they constitute'a worrying backlash against free markets'. 142 Third World countries must go on bending to 'marketdiscipline', argues the magazine--only then will they be rewarded with prosperity 'for decades to come'. 143Increasingly, speculators, industrialists, governments and economic journalists have turned on one another.As one US economist observed, 'The International Monetary Fund blames the national governments, thenational governments blame the outsiders, and the populations blame some combination of the two'. 144Crisis and conflict: World crisis has intensified conflict at every level of the system. While governmentsand global institutions attempt to allocate blame, much more costly conflict takes place within andbetween national states, especially in the Third World. This often has its roots in divisions built into thecolonial state by occupying powers, a problem exacerbated by liberalisation policy and by deepeningsystemic crisis. Regimes under pressure from below may fragment and contending factions attempt tomobilise support on a regional, religious or ethnic basis. The state may implode and basic infrastructure forsupply of food or of healthcare may break up, causing vast numbers of people to flee, creating whatZolberg has called 'the exit from the state'. 145 Just such a situation occurred in the Horn of Africa in theearly 1990s and in West Africa in the mid-1990s, when millions of people in Liberia and Sierra Leonewere displaced. Under these circumstances external powers may attempt to intervene, as in Somalia,which the US invaded in an unsuccessful attempt to re-establish centralised authority--an interestingexample of reassertion of structures of the nation state in a 'globalised' era.

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm20 of 25 16/03/2012 21:46Even in less marginal regions economic crisis may produce sudden mass population movements. Oneresponse of regimes in South East Asia to the 'meltdown' of 1997 was to target migrant labour. At least 2.5million workers in Thailand and Malaysia, and 270,000 in South Korea, were identified as a threat tonational security. Some were incarcerated and many were deported, especially to Indonesia, Burma andBangadesh. 146 Attempts by regimes to mobilise national sentiments can also spiral into sudden regionalconflicts. Just such a scenario emerged in mid-1998 in the Horn of Africa, where Eritrea and Ethiopiabegan an armed conflict, ostensibly over territory but which could only be understood in the context ofimpacts of world crisis upon two very weak economies in which rulers were ready to mobilise all means toensure their survival.Struggles from below: The desire within the capitalist class for more solid political structures within theglobal system is intimately linked to immense pressures from below. Since the deepening of world crisis inthe 1970s every region of the Third World has seen the emergence of mass movements which havechallenged local regimes and regional power structures. These have often taken the form of protestsagainst IMF adjustment programmes. In 1974 the Egyptian regime was first to declare for liberalisation,launching Sadat's infitah. It was immediately confronted by widespread opposition and for three yearsEgyptian society was in turmoil as workers, peasants and the poor engaged in all manner of protestsagainst reduced subsidies on food and fuel, rising prices and rents, and increased political repression.Workers were especially prominent, launching the biggest strike wave since the independence struggles ofthe late 1940s. In January 1977, following further IMF-inspired cuts, there was a massive upheaval whichcombined nationwide strikes with demonstrations, riots and prolonged battles with the police and thearmy. In Cairo, wrote journalist David Hirst, a vast sea of humanity bore down upon the presidentialpalace:The thwarted multitude became...a raging torrent, an uncontrollable force which...unleashed alltheir pent-up fury on targets which, for them, symbolised the yawning gap between the haves andthe have-nots, the frivolity and corruption of the ruling class, the incompetence and blindinsensitivity of the administration... It was a despairing protest against the unspeakable conditionsin which they had to earn their daily bread. 147Tanks and artillery were mobilised against the movement but it required withdrawal of the priceincreases--what Hirst describes as an 'ignominious climbdown'--to save the regime. During the 1980ssimilar protests against IMF programmes affected states across the Middle East: Morocco, Tunisia, Jordan,Lebanon--and Algeria, where in 1988 a prolonged mass movement brought the regime to the brink ofcollapse. By the early 1990s such events were so widespread that media routinely referred to the 'IMFriot'. But throughout this period partisans of globalisation, with their visions of social harmony induced bythe market, preferred to ignore the whole phenomenon of mass action. Meanwhile the Iranian Revolutionof 1978-1979--a testimony to the impacts of uneven development and authoritarian rule which mobilisedmillions of people (and caused deep anxiety among Western states)--was explained away as amanifestation of Islamic perversity.During the 1990s the pace of struggle has intensified, with an unprecedented wave of protests acrossAfrica, notably in Zambia, Malawi, Nigeria, Kenya and Zimbabwe. These have often been linkedspecifically to IMF inspired adjustment programmes and their outcomes. In South East Asia the TigerCubs have been in turmoil. Suharto, viewed in the West as a model liberaliser, has been brought down bya movement of immense power. In Malaysia the masses have rediscovered a voice after years ofrepression by the Mahathir regime. The Tigers themselves are in deep crisis: in a recent analysis in theFinancial Times, investors were warned that South Korea had strong trade unions capable of mountingmass resistance to rising unemployment and that President Kim Dae-jung might be removed. 148Everywhere, rulers fear not only the 'contagion' of economic collapse but the spread of collectivestruggle--a 'domino effect' in which resistance is generalised across states and even continents. 149Although analysis of recent trends reveals that the spread of manufacturing industry outside the 'triad'networks has been exaggerated, the number of workers worldwide continues to grow. In 1980 in the ThirdWorld and former Eastern Bloc countries combined there were 285 million industrial workers (excluding

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm21 of 25 16/03/2012 21:46those in the informal sector); by 1994 there were 407 million such workers. 150 The working class is notonly more numerous but is in general better organised. This is most obvious in some of the newer NICs,where unions have grown with remarkable speed and, especially in South Korea and Taiwan, have proveda potent political force. In countries such as Brazil, India, Turkey and Egypt the working class is especiallyresilient: in the latter the latest wave of denationalisation measures has foundered on workers' refusal toaccept erosion of benefits first granted in the 1950s. And in Africa the protests of the 1990s have beennotable for the high level of engagement by organised workers, especially in South Africa, Kenya andZimbabwe.Millions of such workers and their families live under conditions which express precisely the character ofcombined and uneven development. As a leading Brazilian trade unionist has explained, 'Who lives infavelas [shanty-towns] today is the worker of the most sophisticated industries of the country, the workerat Volkswagen, of Philips, of Villares, Mercedes etc'. 151 Many such workers also retain ties to the land. In1997 the Egyptian government attempted to dismantle the Nasserist land reforms of the 1950s. This'liberalisation' of the rural economy, much favoured by the IMF, has implications for millions of peasantfamilies and soon provoked a response as police enforcing eviction orders on tenant farmers wereconfronted by mass protests. There were also demonstrations in major industrial centres, notably in theNile Delta city of Mehalla al-Kubra, where tens of thousands of textile workers whose families inneighbouring villages had a vital stake in the land, joined the protests. Alarmed by the prospect of ruralresistance combined with mass strikes at the heart of the country's biggest industry, the regime quicklymodified its plans.Mainstream globalisation theory denies such human agency. If human beings feature at all in the globalistaccount it is passively, as consumers. A similar position is adopted in accounts by revisionists who wish tosalvage the global paradigm, suggesting that at best it might be possible to restrain global forces. Forpessimists such as Gray we are on the brink of a 'tragic epoch' in which the forces of anarchy threatenhumanity and in which we must turn to the works of Hobbes and Malthus for explanations of ourpredicament. 152 We would do better to turn to Marx, whose understanding of the dynamics of capitalismboth anticipated world crisis and offered a means to supercede its barbarism. Trotsky, too, saw thecharacter of a growing world system and the emergence of a political collective capable of changing it. In1905, explaining the emergence of societies such as Russia, marked by the process of combined anduneven development, he argued:Binding all countries together with its mode of production and its commerce, capitalism hasconverted the whole world into a single economic and political organism. Just as modern creditbinds thousands of undertakings by invisible ties and gives to capital an incredible mobility whichprevents many small bankruptcies but at the same time is the cause of the unprecedented sweep ofgeneral economic crisis, so the whole economic and political effort of capital, its world trade, itssystem of monstrous state debts, and the political groupings of nations which draw all the forces ofreaction into a kind of worldwide joint-stock company, has not only resisted all individual politicalcrises, but also prepared the basis for a social crisis of unheard of dimensions. 153This crisis, Trotsky argued, had an international character, in which local struggles necessarily had a widerimpact. Revolutionary upheaval in Russia, he insisted, must place on the agenda the question of worldchange. A dozen years later the October Revolution had just this effect. Almost 100 years later, with avastly more developed global economy, the crisis of capitalism is deep and systemic, the class capable ofbringing change is larger, more widely spread and showing every sign of increased combativity. It remains,in Trotsky's words, 'the initiator of the liquidation of world capitalism'. 154NotesThanks to Gary McFarlane for some valuable data, and to John Rees, Adrian Budd, John Rose and Eli Povey for theircomments on the article in draft.1 M Waters, Globalization (London, 1995), p1.2 L Elliott, The Guardian, 2 February 1998.3 'The World in 1998', The Economist, Special Report, December 1997.4 UNDP, Human Development Report 1998 (New York, 1998).

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm22 of 25 16/03/2012 21:465 C Caufield, Masters of Illusion: The World Bank and the Poverty of Nations (London, 1998), p332.6 UNDP, op cit.7 Ibid.8 The Independent, 17 November 1998.9 UNDP, op cit.10 Ibid.11 L Elliott and A Brummer, Special Report on the IMF, The Guardian, 3 July 1998.12 Financial Times, 8 January 1998.13 Quoted in The Independent, 10 February 1997.14 W Keegan, 'Bankers Hold Out Against War On Slump', The Observer, 20 September 1998.15 Ibid.16 M Nicholson, International Relations (Basingstoke, 1998), p65.17 J Gray, False Dawn (London, 1998), p206.18 Ibid, p64.19 Ibid. Several revisions of globalisation dismiss early theorists as 'hyperglobalisers' and as 'utopian' (see D Held, DGoldblatt, A McGrew, J Jerraton, 'The Globalization of Economic Activity', New Political Economy, vol 2, no 2, July1997). Gray also goes to pains to explain 'what globalisation is not', with the purpose of rescuing the idea from those hedubs 'extreme globalisers' (J Gray, ibid, p76).20 The question of which theory of globalisation to address has also provoked debate among US academics associatedwith the Monthly Review journal. The exchanges reveal how disorienting are notions of globalisation which accept theglobalisers' terms of reference and their contention that a positive world integration has been accomplished. See thearticles by Tabb, Du Boff and Herman, and Ellen Meiskins Wood in Monthly Review, June, July-August, and November1997.21 B Axford, The Global System (Cambridge, 1995), p94.22 P Hirst and G Thompson, Globalization in Question (Cambridge, 1996), p195.23 Ibid, p195. Globalisers appear to be unanimous in relation to the nation state, which is said to have been weakened oreven rendered irrelevant by economic processes. Horsman and Marshall present a typical analysis, suggesting that,'Effortless communications across boundaries undermines the nation state's control; increased mobility, and the increasedwillingness of people to migrate, undermine its cohesiveness. Business abhors borders and seeks to circumnavigatethem... The nation state...is increasingly powerless to withstand these pressures.' Quoted in I Douglas, 'Globalisation andthe End of the State?', in New Political Economy 2:1 (1997), p167.24 A Hoogvelt, Globalisation and the Post-Colonial World (Basingstoke, 1997), p124.25 N FitzGerald, 'Harnessing the Potential of Globalization for the Consumer and Citizen', International Affairs, vol 73,no 4, October 1997, p741.26 Ibid.27 N Harris, The New Untouchables (London, 1997), p228.28 W I Robinson, 'Globalisation: Nine Theses for our Epoch', Race and Class 38:2 (1996), p28.29 Ibid, p14.30 Ibid, p13.31 M Waters, op cit, p95.32 Such a view might be seen as merely bizarre or as the 'utopian' vision of a few academics and corporate strategists ifit were not one embraced in thousands of boardrooms. Evidence of the reality of world integration and of socialharmonisation is seen in the emergence of new social categories such as the 'global teens' said to occupy a 'globalspace'--'a single pop-culture world, soaking up the same videos and music and providing a huge market for designerrunning shoes, T-shirts and jeans'. These new layers of consumers, whose tastes cross old political and culturalboundaries, are viewed as testimony to the global condition. So for FitzGerald of Unilever we now live in a 'world ofdiminishing borders, corporate responsibility, individualism and consumer power'. Its true benefits lie in the relations thatcan be established between business and consumer: in the new era, it is a matter of 'harnesssing the potential ofglobalization for the consumer and citizen' (N FitzGerald, op cit, p739).33 UNDP, Human Development Report 1997 (Oxford University Press, 1997).34 Ibid.35 Ibid.36 Ibid.37 Quoted in W I Robinson, op cit, p29.38 Ibid.39 The Guardian, 28 August 1997.40 The Guardian, 17 October 1998.41 Philippines President Joseph Estrada, reported in The Guardian, 14 October 1998.42 The Guardian, ibid.43 R Cox, 'Critical Political Economy', in B Hettne et al (eds), International Political Economy: Understanding GlobalDisorder (London, 1995), p41.44 Reported in UNDP (1998), p30.45 Ibid46 Ibid.47 Ibid.48 R El-Ghonemy, Affluence and Poverty in the Middle East (London, 1998), p231.

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm23 of 25 16/03/2012 21:4649 K Marx and F Engels, 'The Communist Manifesto', in K Marx and F Engels, Selected Works (Moscow, 1962),pp34-35.50 Ibid.51 K Marx, 'The Future Results of the British Rule in India', in K Marx and F Engels, On Colonialism (ForeignLanguages Publishing House), p84.52 K Marx, 'The British Rule in India', in K Marx, On Colonialism, op cit, p39.53 Ibid, p37.54 Engels on the bourgeoisie in the German Revolution, in F Engels, 'Revolution and Counter-revolution in Germany', inK Marx and F Engels, Selected Works, op cit, vol 1, p300.55 K Marx, 'The Future Results of the British Rule in India', op cit, p88.56 Quoted in I Cummins, Marx, Engels and the National Movements (London, 1981), p147.57 L Trotsky, 'Results and Prospects', in The Permanent Revolution and Results and Prospects (New York, 1969), p49.58 Ibid, p51.59 A Callinicos, 'Imperialism, Capitalism and the State Today', International Socialism 2:35 (1987), p108.60 P Harrison, Inside the Third World (London, 1993), p350.61 Ibid, p351.62 C Harman, 'The State and Capitalism Today', International Socialism 2:51 (1991), p9.63 Quoted in A Hoogvelt, op cit, p128.64 P Cerny, 'The Political Economy of International Finance', Finance and World Politics (Edward Elgar, 1993), p18.65 Much of the money in the new networks is associated with the circulation of money itself. What Strange calls 'casinocapitalism' amounts to a huge increase in debt, especially private debt, and in secondary speculation against it. Accordingto UNCTAD, during the 1980s the ratio of the size of international bank lending to the size of the world's total fixedinvestment (a measure of the 'real' economy) more than doubled. By 1992 world indebtedness exceeded even the totalgross domestic product of the richest (OECD) countries.66 B Axford, op cit, p107.67 P Hirst and G Thompson, op cit, p40.68 Ibid, p41.69 From Shutt, 'The Trouble with Capitalism', quoted in The Independent, 30 June 1998.70 J Stopford and S Strange, Rival States, Rival Firms (Cambridge,1991), pp40-41.71 D Harvey, The Condition of Postmodernity (Oxford, 1989), p161.72 M Waters, op cit, p88.73 P Cerny, op cit, p18.74 J Gray, op cit, p206.75 See P Green, 'Debt, the Banks and Latin America,' International Socialism 2:21 (1983).76 Callinicos comments of this 'parasitism' that it reflected the continuing low rate of return in manufacturing industry: 'aconsequence of the crisis of profitability which capitalism entered in the late 1960s and has still to escape' (A Callinicos,op cit, p92).77 M Waters, op cit, p187.78 Emerging Markets Factbook (London, 1994).79 Ahram Weekly (Cairo), 23 April 1997.80 Quoted in P Cerny, op cit, p68.81 In a similar development in 1991 Iraq's invasion of Kuwait prompted a mass movement of money from Gulf bankingcentres such as Bahrain to accounts in London and New York. Billions of dollars moved overnight. See P Cerny, op cit,p69. During the Thai and Malaysian 'meltdowns' of 1997 the Financial Times reported large redemptions of Asian fundsin the US, adding that events in South East Asia would prove a source of underlying support for the US market 'asinvestors flee to quality'. Such rapid movement of capital to traditional financial centres within dominant nation statesspeaks eloquently of the latters' continuing weight within the world system. See the Financial Times, 30 August 1997.82 Richard Waters in the Financial Times, 29 August 1998.83 The Observer, 13 September 1998.84 Financial Times, 12 August 1998.85 Lending by international banks in Africa, Asia and Latin America rose very rapidly in the 1970s; within a decade,however, the debt crisis and increased general instability had all but brought it to an end. By 1989 lending to Africa, Asiaand Latin America was just 11 percent of the global total. (A Hoogvelt, op cit, p83). The earlier debts remained.86 Financial Times, 5 January 1998.87 See C Sparks, 'The Eye of the Storm', International Socialism 2:78 (1998).88 During the 1960s it accelerated rapidly, reaching an annual increase of 9 percent by 1973 (P Hirst and G Thompson,op cit, pp21-22). By the mid-1990s the rate of growth was unchanged over the level attained a decade earlier (AHoogvelt, op cit, p71).89 C Kegley and E Wittkopf, World Politics (New York, 1995), p247.90 Ibid, p247.91 A Milward, The European Rescue of the Nation State (London, 1992), p134.92 C Kegley and E Wittkopf, op cit, p247.93 The Economist, 20 November 1993.94 C Kegley and E Wittkopf, op cit, p265.95 A Hoogvelt, op cit, p73.96 N Harris, The End of the Third World (London, 1986), p58.

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm24 of 25 16/03/2012 21:4697 Ibid, p59.98 M Waters, op cit, p76.99 A Hoogvelt, op cit.100 P Hirst and G Thompson, op cit, p55.101 C Harman, 'Globalisation', International Socialism 2:73 (1996), p7.102 A Hoogvelt, op cit, p77.103 Financial Times, 1 October 1997.104 Ibid.105 World Bank, Global Economic Prospects and the Developing Countries (Oxford, 1997).106 P Hirst and G Thompson, op cit, p68.107 Ibid.108 W Ruigrok and R van Tulder, The Logic of International Restructuring (London, 1995), p156.109 R Kiely, 'Globalization, Post-Fordism and the Contemporary Context of Development', International Sociology 13:1(1998), p102.110 C Harman, op cit, p14.111 R Kiely, op cit, p105.112 Ibid.113 M Korzeniewicz, 'Commodity Chains and Marketing Strategies: Nike and the Global Athletic Footwear Industry,' inG Gereify and M Korzeniewicz (eds), Commodity Chains and Global Capital (London, 1994), p259.114 W Ruigrok and R van Tulder, op cit, p164.115 A Hoogvelt, op cit, p140.116 W Ruigrok and R van Tulder, op cit, p151.117 R Kiely op cit, p104.118 N Harris, op cit, p192.119 A Callinicos, op cit, p93.120 Report from American Express Bank, The Independent, 28 February 1998.121 N Harris, op cit, p30.122 Datta-Chaudhuri, quoted in T Hewitt, Industrialization and Development (Oxford, 1992), p187.123 R Hinnebusch, Egyptian Politics Under Sadat (Cambridge, 1985), pp69-70.124 R Sandbrook, The Politics of Africa's Economic Recovery (Cambridge, 1993), p5.125 Ibid, ch 3.126 Ibid, p8.127 World Bank, World Development Report 1990 (New York, 1990), p178.128 The Guardian, 6 May 1998.129 Ibid.130 Investment Week, 21 September 1998.131 The Guardian, 11 May 1998.132 Ibid.133 World Bank, World Development Report 1996 (New York, 1996).134 ICEM, Power and Counterpower: The Union Response to Global Capital (London, 1996), p40.135 The Guardian, 11 May 1998.136 A Simms of Christian Aid, reported in The Guardian, 8 October 1998.137 Ibid.138 C Barshefsky, quoted ibid.139 Financial Times, 29 August 1998.140 Financial Times, 23 September 1997.141 Quoted in J Gray, op cit, p1.142 The Economist, 5 Sepetember 1998.143 Ibid.144 Financial Times, 23 June 1998.145 E Zolberg, A Suhrke and S Aguay, Escape from Violence, the Refugee Crisis in the Developing World (New York,1989), p44.146 The Guardian, 7 January 1998.147 D Hirst and I Beeson, Sadat (London, 1981), pp242-243.148 Financial Times, 23 June 1998.149 Rulers of the dominant world states also face the reality of crisis and of widening inequalities at home. In its 1998report the UNDP noted for the first time that vast numbers of people in Western countries are in poverty. In developedcountries, it noted, more than 37 million people are unemployed, 100 million people are homeless, and 100 million arebelow the poverty line. Unevenness within such countries is also becoming more pronounced. One US governmentofficial has admitted, 'A child born in New York in the 1990s is less likely to live to the age of five than a child inShanghai. A child born in Bangladesh has better life expectancy than a child born in Harlem.' He warned of theconsequences if such problems were not tackled (L Summers, US Deputy Treasury Secretary, quoted in The Independent,10 February 1998).150 K Moody, Workers in a Lean World (London, 1997), p186.151 Ibid, p209.152 J Gray, op cit, p207.

GLOBALISATION AND THE THIRD WORLDhttp://pubs.socialistreviewindex.org.uk/isj81/marfleet.htm25 of 25 16/03/2012 21:46153 L Trotsky, op cit, pp107-108.154 Ibid, p108.Return to Contents page: Return to International Socialism Journal Index Home page

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