For Arundhatis and Medhas of the World. Review on In Defense of Globalization - Jagdish Bhagwati

One aspect of the infamous Cold War between the erstwhile USSR and USA was the stark difference in the economic policies pursued by them. While USA opted for a liberalized economy, USSR under Communist regime opted for a Socialized regime. The North America continent and the West and Central Europe mainly followed USA, whereas majority of Asia was influenced by USSR in forming their economic policies.

The Cold War ended in early 1990s with disintegration of USSR and along with it died the socialism. Still ghosts of socialism are alive in various forms around the world, which cannot come to terms with the realities because the winds of change threaten their existence. I am talking about the organizations like World Social Forum, Communist Party of India, Oxfam and NGOs like Fifty Years is Enough.

Globalization has also been blamed for everything from child labor to environmental degradation, cultural homogenization and a host of other ills affecting rich and poor nations alike. Jagdish N. Bhagwati’s ‘In Defense of Globalization’ is a fitting answer to the detractors of globalization.

Late last year I came to know about this book while reading Shekhar Gupta’s Walk the Talk with Mr. Bhagwati in The Indian Express. Also one of my favorite Gujarati Columnists, Mr. Gunawant Shah (writes for Sandesh) wholeheartedly recommended this book.

About The Author:

Jagdish N. Bhagwati is University Professor at Columbia University and Andre Meyer Senior Fellow in International Economics at the Council on Foreign Relations. He has also been a Special Advisor to the United Nations on Globalization. A Cambridge graduate, he scored first after being taunted by his tutor that Indians don’t do well in economics. (During those years, three distinguished Indians ruled Cambridge’s economic school. For three years in row, Indians stood first – Dr. Amartya Sen, Bhagwati and Dr. Manmohan Singh).

The Book:

The book starts by defining the phenomena of globalization in the most lucid and thorough manner. If one were to define it in simple way, the globalization constitutes integration of national economies into the international economy through trade, foreign direct investment, short-term capital inflows, international flows of workers and humanity generally and flows of technology.

If you ever cared to take notice of high decibel rhetoric expressed by the likes of Arundhati Roy and Medha Patkar at the annual meet of World Social Forum (recently held in Mumbai), you would be led to believe that every social ill, onslaught on culture and economic disparities in the third world countries are the direct result of globalization. Every time when and where WTO meets to talk about the future of world trade, champions of anti-globalization carefully, meticulously orchestrate protests at the meeting venue. Unfortunately that attracts extensive media coverage and resultantly general public is led to believe that the politicians who talk and decide on integration of global economy are pawns of the big corporations and they don’t care about the grievances of common man.

Bhagwati deals with every serious allegation hurled by the socialists with intricate analysis and details backed by actual facts and figures. Lets look at four major topics discussed in the book…

Coping with Anti-Globalization:

The main premise of the anti-globalization protests has been the allegation that it is not only economically disastrous but also perpetuates social ills. And the prevalent economic disparities between the first world developed nations and third world developing nations are utilized as a concrete evidence to support this argument.

Bhagwati states that perils of globalization have been largely exaggerated. The fact remains that largely anti-capitalism, anti-corporation and anti-Americanism are the three pillars on which the structure of anti-globalization has been erected. Bhagwati demolishes each pillar by providing strong, plausible arguments and facts.

Globalization’s Human Face: Trade and Corporations

This portion of the book hits hard at the core of the anti-globalization movement. With solid facts and figures of the past few years of the developed and developing world, Bhagwati passionately demolishes the apparently sound case of the socialists.

There are eight chapters in this section dealing with the wide array of issues such as Poverty, Child Labor, Women Representation, Democracy and Dictatorship, Culture, Wages and Labor Standards, Impacts on Environment and the concept of large Corporations. Bhagwati’s impassioned narrative leaves you with everlasting impact and you cannot but realize that he has poured his heart in discussing each of the above.

If one were to go by history and past 50 years of experience with Globalization and Socialism in various parts of the world, each of the above blemishes are rampant in the countries which opted for Marxism – e.g. majority of Asian countries including China, Russia, India and ASEAN countries. Whereas their proportions in the Free Market Economies such as North America, West Europe and Japan are radically low. And China has been able to reduce the social curses by an astronomical extent after junking the closed market socialist economy.

The last two chapters emphasize importance of efficient governance in conjunction with reformist economy and the potential perils of globalization. Bhagwati is at pains to explain that globalization in some cases fails to yield the expected results largely due to failure of the implementing mechanism to reform itself. Globalization strikes at the center of the power center of the bureaucrats governed economy and resultantly the economic power center shifts from the public sector enterprise to the private sector.

In India’s Context:

The economic reforms started in 1992 by our Dr. Mahmohan Singh and continued by successive governments have started producing some tangible results. Some of them are quite evident in the success of IT Industry and telecom revolution. Emergence of insurance and banking sectors and recent broad based reforms in the energy and aviation sector wills start showing tangible results in near future. Poverty has reduced from staggering 35% in 1991 to 25% in 2001. And it is widely speculated that the proposed reforms in retail sector will greatly benefit the farm sector and will energize the mostly miserable retail sector, thereby creating significant skilled and unskilled employment pushing the economy even more.

Finally…

This book is a must read for anyone who is even slightly interested in economics. Prof Bhagwati has stylishly poured his heart in the book and he surely deserves a Nobel for his efforts.