Economic Debates

Globalisation and the neo-liberal agenda

When big business released its "Growth for All" document, many in the labour movement pointed out that its approach was consistent with the global neo-liberal agenda. But what is globalisation and the neo-liberal agenda?

There have been major changes in the world economy over the last 20 years. For over 100 years, industrial capitalism in its imperialist phase has been a global reality. But, since the mid 1970's, the global character of capitalism has intensified and acquired new features. These new developments are referred to as "globalisation".

Why globalisation?

The process towards globalisation coincided with a downturn in the long period of growth and prosperity in the advanced capitalist countries. From 1945 (the end of the second World War) through to the early 1970's there was a "golden age" in these countries. This came to an end around 1973.

There are various explanations for this downturn, including:

• a decrease in profitability in the heart-lands of capitalism because their own home markets were increasingly saturated;
• growing instability in the international money markets.

Main features

These pressures have resulted in a much more globalised world economy with the following main features:

• Over the past 20 years the international flows of capital have increased dramatically. Now, each day, billions of dollars flow (at least on computer screens) back and forth across the globe, seeking speculative gains, searching out areas for quick profits. These money flows are far beyond the control of even the most powerful governments.
• The reorganisation of production in the pursuit of greater profits and "flexibility". More and more, the major transnational corporations organise their production processes on a global scale. It is no longer just a question of investing capital in foreign gold mines, for instance. Design and production of different parts of the same commodity are now often spread out over several countries.
• These developments have stimulated (and have in turn been fostered by) the revolution in information technology. In the last 20 years there have been rapid changes in international communications - satellite TV, computers, and the Internet. These developments have greatly facilitated the massive flows of capital, and the global dispersion of production processes.

Results

Globalisation has resulted in new but uneven industrialisation in parts of the globe - parts of Brazil, SA, and Asia. However, this variant of industrialisation has seldom resulted in the all-round development of these third-world countries.

Globalisation has also increasingly strangled the welfare state in most of the advanced capitalist countries of the north. There is growing unemployment throughout western Europe, and increasing pressure to privatise the public sector, and to slash public spending on social security. National capitalists now feel less and less constrained by national accords, as they pursue greener pastures in Taiwan, Indonesia, or Malaysia.

Above all, globalisation has greatly strengthened the power of the major financial institutions - notably the IMF and the World Bank. In the past 15 years, large parts of the third world have been "re-colonised", not through military occupation or political administrative take-overs, but through the manipulation of debt and the flow of loans. As a result of IMF-imposed Structural Adjustment Programmes, the cash-strapped continent of Africa is now exporting (yes, exporting) more money to the money-rich West, than it receives in investment and loans!

The neo-liberal agenda

Neo-liberalism is, precisely, the agenda of those who stand to benefit most from this globalisation of capitalism. It is an agenda that seeks to break down all obstructions to the absolutely free-flow of profit-seeking capital. Thus, it is:

• An agenda that campaigns against the active participation of the state in the economy - the state's role is simply a law and order (protecting property) function. Neo-liberalism campaigns for deregulation, privatisation and drastic cutting back of public sector spending. During the height of the Cold War, the West was happy to back powerful military bureaucracies in many Third World countries - including SA. With the Cold War gone, even these former allies of the West are now seen as economic obstructions.
• An agenda that targets organised workers. It argues for "flexibility" in the labour market. It seeks to undermine national negotiation by disinvesting into poorer countries with less organised labour, or by striking separate deals with regions within countries, by campaigning for Export Processing Zones, or by calling for two- tier labour markets, etc.
• An agenda that seeks to push national economies into an export-centred strategy. The more economies are geared to exports, the more they become dependent on the goodwill of the most powerful economic forces, and the less they are able to set their own national development agendas. We vote for national governments, but more and more economic decisions get taken by unelected supra-national institutions.

Is there an alternative?

The neo-liberal agenda is bad news for workers and progressive forces worldwide. Can it be resisted? Yes it can, but this resistance needs to be intelligent and strategic. It also requires its own international co-ordination.

SA has a small to medium economy that is already very open to the world and dependent on exports and imports, we cannot seal ourselves behind a wall. We have to engage with the realities of globalisation. But in engaging we have to set, as much as possible, our own national and Southern African development agenda.

In this respect, both the RDP document and the Nedlac labour caucus document, "Social Equity and Job Creation", provide very clear alternative perspectives. This means: strengthening the capacity and sovereignty of our new national government. And it means building the organisational and strategic capacity of unions and other progressive social movements.