V
The question would be asked:
even if a tendency for production to atrophy is embedded in the functioning
of international finance capital, can't such a tendency be more than
offset by the export boom made possible by trade liberalisation all
over the world? One hears so much these days about the possibility of
export-led expansion of the IT sector that this question is a very natural
and pertinent one. For answering it however we have to be clear about
a few general issues.
In a world of liberal trade,
the growth rate of the third world as a whole would depend upon the
growth rate of its exports, which basically means exports to the metropolitan
countries [4] . Unless we visualise the third world making
significant capital exports to the metropolitan countries (not "drain"
but capital exports), which is obviously unrealistic, this rate of growth
of exports would be tethered to the rate of growth of the metropolitan
countries themselves. Since the era of globalised finance is characterised
by a slowing down of the growth rates in the metropolitan countries,
then, quite apart from the effect of globalised finance on the third
world that we have discussed, the latter's growth rate would get adversely
affected for this additional reason as well. The only offsetting factor
against this adverse effect is a progressive reduction in the
third world's import propensity from the metropolis, or an increase
in the metropolitan countries' import propensity from the third world,
i.e. if liberal trade enables the third world to outcompete the metropolis
in a whole range of products. Is this possible?
What is quite remarkable is
that the range of manufactured products which even the champion exporters
within the third world, namely the Asian "miracle" economies,
have been successful in exporting, has been a limited one
[5]
. And the markets in the advanced capitalist countries for this
range of goods, whether belonging to the traditional segment, e.g. textiles,
or to the modern segment, e.g. consumer electronics, are not growing
particularly rapidly. This being the case, third world economies can
at best play the game of "hopscotch", some economies stepping
into the role of being successful exporters in this range ousting some
other economies, and then stepping out as they in turn are ousted by
others. Particular economies can temporarily provide shining examples
of export success, and even be labelled as "miracle" economies;
but after a while as they are ousted from their export slot, their "miracles"
would begin to wane.
This in fact is what has been
happening. East Asia's export success, after it had moved out of traditional
areas like textiles, was based on a few items like consumer electronics,
office automation and telecom equipment.When South-East Asia stepped
into these very areas, the venue of the "miracle" shifted
to South-East Asia, and East Asia's export performance started becoming
less impressive. And within South East Asia too the recent success of
thePhilippines in exporting these very goods has no doubt been purchased
at the expense of the others, in a situation where advanced country
demand for such exports has reached near saturation. In short, the success
in different periods of different Asian economies in pushing out manufacturing
exports is not indicative of the fact that the world has entered a new
era when all implicit and explicit trade barriers have broken down and
anyone can outcompete any one else in the world market by being a cheaper
producer. All that it indicates is that the metropolis is now willing
to readjust the traditional division of labour between the third world
and itself to locate certain newer areas within the domain of the third
world. Since these newer areas however are strictly bounded, the growth
rate of exports, and hence by implication the overall growth rate, of
the third world as a whole, would be slower in a regime of free
world trade, in so far as globalisation of finance lowers the growth
rate of metropolitan economies, for reasons we have seen. What is more,
since in the face of reduced activity in the metropolitan economies,
they would be keen on penetrating third world markets to boost their
own domestic employment, i.e. to use export surpluses to the third world
(financed by "hot money" inflows into the latter) to offset
at least partly the consequences of their inability to pursue Keynesian
demand management policies at home, liberalised world trade would have
the opposite effect of precipitating deindustrialisation in the
third world, and hence curbing its growth rate.
This of course does not preclude
particular segments of the third world achieving high growth
rates for certain periods while other segments languish. But trade liberalisation
in a world where the metropolis is growing on average more slowly than
before would necessarily have a growth-reducing effect on the third
world as a whole. When we add to it the directly contractionary effect
of globalised finance on the third world economies via the high interest
rates and accentuated fiscal crises, it is clear that the current phase
of world capitalism, far from being conducive to the diffusion of development
to the third world, in the sense of bringing the bulk of the people
in the latter closer to the living conditions of the people in the metropolis,
has precisely the opposite effect.
Since in a regime of liberal
trade in the current world situation, the third world according to the
above argument can achieve export success mainly in those spheres where
it is not directly competing with the metropolitan countries, it follows
that the export of primary commodities, which are in heavy demand in
the metropolis but not producible there, would emerge as a favourite
pursuit. The export of a variety of agricultural commodities falls into
this category and invariably entails a shift of land-use from the production
of foodgrains for domestic consumption. A ubiquitous effect of trade
liberalisation in the tropical third world has been a decline in the
rate of growth of per capita foodgrain output (or even an absolute decline
as in India), a consequent undermining of domestic food security, and
wild fluctuations, far greater in amplitude than under the earlier era
of protected dirigiste regimes but in consonance with the fluctuations
occurring in the world market, in the prices of agricutural commodities
[6]
. Such fluctuations hurt consumers during upswings, hurt producers
during downswings, destroy investment incentives of a risk-averse peasantry,
and thereby contribute further to the arresting of development.
