t. n. sreedhara
TRANSCRIPT
كل السلطةللشعب: الندوة الدولية حول
إشكالية السلطة بين التسلط والتحرركل السلطة للشعب
Colloque International sur le probleme du pouvir
Entre la Domination et la LiberationTout le Pouvoir est au Peuple
International symposium on the problem of authority
Between Domination and LiberationTo whole Authority for whole people
Globalisation, Nation States, and the Emerging Regionally
Anchored Economic Actors: Experiences from India
Dr T. N. SreedharaProfessor of Business Administration
Introduction
Contemporary debate on globalisation reveals us the central reality that it has, over and
above its overpowering character, multiple representations and implications in different societies
differently. India, as a society of colonial inheritance, has been a recipient of globalisation
ideology from its wrong end. In fact, the story of globalisation influx in India is a culmination of
the earlier story of colonial domination. Like other societies in Asia and Africa, India, first
under colonialism and now under globalisation, has been a victim of borrowed models of
development resulting in disastrous consequences. Given this, the paper attempts to examine the
Globalisation, Nation States, and the Emerging
Regionally Anchored Economic Actors: Experiences from India
Dr T. N. SreedharaProfessor of Business Administration
major debates on globalisation primarily to draw implications on the agenda of development in
India and its consequences on the nature of domination and political authority.
I
The process of integration that was initiated at the global level with the collapse of the
Berlin Wall is popularly termed as globalization, though this process has been there from the
dawn of the human civilization in one form or the other. The use of the term globalization to the
contemporary integration process is significant due to the following reasons. First, the rapidity
with which the current global integration is taking place is unheard of in the history of human
civilization. Secondly, the new technology is exponentially destroying/displacing the hitherto
believed institutions and values that are anchored in the spirit of nationalism in such a way that
now we are compelled to think beyond the traditional nationalistic framework. Thirdly, this
process is distinct from the earlier ones in that that the problems of exclusion and the consequent
problems that we are facing today, and that we are going to face tomorrow, is unparalleled in the
history of human civilization. Finally, the impact of this inevitable process is universal
irrespective of nationality, stage of development and the nature of political ideology of the
country. Therefore, it is vital that we understand the main discourses of globalization before we
attempt to understand the emerging trends in India. The contemporary globalization discourses
could effectively be understood in terms of hyperglobalist, skeptic and transformationalist
perspectives.
Hyperglobalist view of globalisation
The hyperglobalists believe that globalization is a real phenomenon and
is brining about not only quantitative, but also qualitative changes in
international and transnational relations and interactions, and as such it
heralds a new epoch of human history. This thesis is anchored in neo-liberal
economic logic and predicated on the emergence of a single global market
and global competition as the engine of human progress. Economic
globalization, according to hyperglobalists, will lead to denationalization of
economies by creating transnational networks of production, trade and
finance and the creation of the borderless world. Ohmae and others argue
that the traditional nation-states have become unnatural, even impossible
business units in a global economy.1 As a result, they argue, the national
governments would just act as transmission belts for global capital. Strange
goes a step further and asserts, “the impersonal forces of world markets . . .
are now more powerful than the states to whom ultimate political authority
over society and economy is supposed to belong . . . the declining authority
of states is reflected in a growing diffusion of authority to other institutions
1 Ohmae, Kenichi. The End of the Nation State, New York: Free Press, 1995; Wriston, Walter, B. The Twilight of Sovereignty: How the Information Revolution is Transforming Our World, Scriber: New York, 1992; Guéhenno, Jean M. The End of the Nation-State, Minneapolis: University of Minnesota Press, 1995; and Friedman, Thomas, The World is Flat: A Brief History of The Globalised World in the 21st
Century, Allen Lane: London, 2005.
and associations, and to local and regional bodies.”2 Hyperglobalists
discourse, however, represents considerable divergent normative viewpoints
between neo-liberal and neo-Marxist camps. But notwithstanding the
divergent ideological positions, both the camps share the view that
globalization is primarily an economic phenomenon increasingly integrating
the global economy and that the global capital demands neo-liberal
economic discipline guided by ‘the principle of sound economic
management’.
Skeptic view of globalisation
As opposed to the views of hyperglobalists, the skeptics hold that
globalization is a myth. They argue that the post 1990s developments could
be viewed at best as the quantitative increase than qualitative alternations
as hyperglobalists claim. To skeptics, globalisation necessarily implies a
perfectly integrated worldwide economy, the ‘law of one price,’ and
heightened levels of internationalization. Hirst and Thopson, for example,
assert that the contemporary ‘globalization’ is wholly exaggerated and that it
only demonstrates that world economy is undergoing a significant
‘regionalization’.3 The skeptics consider the hyperglobalist thesis as
2 Reich, Robert. B. The Work of Nations. Knopf: New York, 1991.3 Hirst, Paul and Thompson Graham. Globalization in Question. The International Economy and the Possibility of Governance, Cambridge: Polity Press, 1996.
basically defective and politically naive as it undermines the lasting power of
national governments to regulate international economic activity. Again,
skeptics point out that the global widening and deepening process is not new
and historically the human civilization may have witnessed even higher
degree of interdependence. The nature of interdependence what we are
experiencing today is not at all global as this process is highly selective and
asymmetrical and a reinforcing factor of existing inequalities and exclusions.
The skeptics argue that this process, contrary to hyperglobalist view, could
trigger socio-economic and political reactions encouraging fragmentation,
rationalization and the erection of new borders. Therefore, they reject the
thesis that the power of national governments or state sovereignty is being
undermined by economic internationalization.4
Transformationalist view of globalisation
Unlike hyperglobalists and skeptics, transformationalists acknowledge that we are
currently witnessing new kinds of processes on a global scale that have the capacity to induce
desirable transformations in the international system thus presenting both challenges and
possibilities. They also, like other views, do not believe that the path these processes will take is
inescapably predestined and independent of the choices real actors will be making. To a certain
4 Held, David; McGrew, Anthony; Goldblatt, David; and Jonathan Perraton. Global Transformations. Politics, Economics and Culture, Cambridge: Polity Press, 1999.
extent, transformationalists’ accounts emphasize globalization as a long-term historical process
which is extolled with inconsistencies and which is significantly shaped by conjectural factors.
Nierop argues in this context, ‘Virtually all countries in the world, if not all parts of their
territory and all segments of their society, are now functionally part of that larger [global] system
in one or more respects.’5 Transformationalists are convinced that, at the dawn of a new
millennium, globalization is a central driving force behind the rapid social, political and
economic changes that are reshaping modern societies and world order.6 Therefore, they
conceive globalization as a powerful transformative force, which is responsible for a ‘massive
shake-out’ of societies, economies, institutions of governance and world order.7 Consequently,
they argue, these processes are historically unparalleled such that governments and societies
across the globe are being compelled to adjust to a world in which there is no longer a clear
division between international and domestic, external and internal affairs.8 Nevertheless,
according to them, the existence of a single global system does not signify global convergence or
of the arrival of single world society. Conversely, they argue, it is associated with new patterns
of global stratification in which some states, societies and communities are becoming all the time
more trapped in the global order while others are becoming ever more marginalized. A new
5 Nierop, T. Systems and Regions in Global Politics: An Empirical Study of Diplomacy, International Organisation and trade 1950 -1991, John Wiley: Colchester, 1994.
6 Scholte, Jan Aart. International Relations of Social Change, Open University Press: Buckingham, 1993; and Castells Manuel. The Rise of the Network Society, Blackwell: Oxford, 1996.
7 Gidden, Anthony. Durkheim on Politics and the State, Polity Press: Cambridge, 1996.
8 Sassen, Saskia. Losing Control? Sovereignty in an Age of Globalisation, Columbia University: New York, 1996.
pattern of global power relations is held to be crystallizing giving way to a new international
division of labour such that the ‘familiar pyramid of the core–periphery hierarchy is no longer a
geographic but a social division of the world economy.’9
In any case, globalisation today has occupied the center-stage in all kinds of intellectual
debates. In the context of the impact of globalisation Joseph Stiglitz, in his seminal work on
globalisation, observes that,
“Globalisation today is not working for many of the world’s poor. It is not working for much of the environment. It is not working for the stability of the global economy. Caring about the environment, making sure the poor have a say in decision that affect them, promoting democracy and fair trade are necessary if potential benefits of globalisation are to be achieved,” 10
Similarly, Jacques Deforny and others, while talking about the increased power of capital and the
consequent displacement and marginalisation of the majority of the people world over make the
following observation:
“Today, globalisation is accompanied by the creation of economic blocs covering large areas. Global elimination of controls on capital was the basis for the financial globalisation that led to the creation of these blocs. Globalisation is sustained through deregulation and trade liberalization, and amplified by the new communication technologies. Business now focuses much more on export markets than on their home market and this extroversion is growing. The leading national and international concerns in this new social and economic landscape are the cries of employment and social cohesion, as exemplified by the growing rift between skilled and unskilled workers of the North and intense competition among nations of the South. As a result,
9 Hoogvelt, Ankie. Globalisation and the Post-colonial World, London: The Macmillan Press Ltd., 1997. 10 Stiglitz, Joseph E. Globalization And Its Discontents, Penguin Books, New Delhi, 2002.
large sectors of the population have been pushed into the informal economy, the last buffer against social upheaval.”11
Valerian Rodrigues provides an apt description of the complex and multi-faceted dynamics of
globalisation thus,
“The last three decades have witnessed certain profound changes in this (world) configuration resulting in new and larger networks of exchange; great movement of peoples, goods and information; trans-national, social and economic interaction and increasing flows of trade, investment and culture. Such changes are not merely quantitative. New economic, political and cultural institutions have arisen. These changes have circumscribed the place and role of the nation-state in a profound way. Increasingly, our lives today are intimately shaped by developments beyond the confines of the nation-state. Changes in technology and information have radically altered the hither to familiar notions of space and time. The relationship between culture, economy and politics is being redefined through rapid exchange of information, ideas and knowledge. These changes, both quantitative and qualitative, are attempted to be captured by the term globalisation.’’12
II
Development, globalisation, and India
India’s long and complex historical encounter with colonialism, her eventual attainment of
freedom, and her adoption of the path of modernization got inter-linked to determine decisively
11 Deforny, Jacques et. al. Social Economy: North and South, Centre d’ Economie Sociale, Universite De Liege, 2000.
12 Rodrigues, Valerian. “Globalisation – An Introduction,” Paper presented in the national seminar on globalisation held during may 7-10, 2001 at Udupi, Karnataka, India.
her destiny in the post-independent period. Consequently, the newly emerged independent India
was destined to be ‘modern India.’ India’s first Prime Minister Jawaharlal Nehru, who happened
to sphere-head the project of modernizing India, unequivocally believed that modern India had to
be an ‘Industrial India’ poised for rapid and unprecedented scientific and technological
advancement, and economic development through centralized planning. Being socialistically
oriented, Nehru envisaged a Welfare State under the guidance of which Indian economy was to
prosper and the society to advance. He, being a victim of the logic of neo-classical economics,
believed that economic development would necessarily and automatically guide to social
advancement through the intervention of welfare oriented, enlightened State and a clear strategy
of planning.13 Thus, Nehru’s agenda of modernization as the official philosophy of Indian State
meant industrialization, application of science and technology in every sphere of life, and
introduction of English education.
Nehru strongly held that given these processes at work under the initiation and monitoring
of the State, the objectives of development, equality, empowerment, and justice would be
realized in the due course of time by the intrinsic capabilities of the forces of modernization. In
other words, Nehru held that the process of economic development would percolate down to all
spheres of social life due to effective State intervention and planning. One of the reasons that
13 Ghosh, Shankar. Political Ideas and Movements in Modern India, Allied Publishers, Bombay, 1972. See some of the works related with these aspects: Dutt, Palme. India Today, Manisha Granthalaya Private Ltd., Calcutta, 1989; Misra, B. B. The Indian Middle classes: Their Growth in Modern Times, Oxford University Press, Oxford, 1983; Bagchi, Amiya Kumar. The Political Economy of Underdevelopment, Cambridge: Cambridge University Press, 1982.
forced Nehru to ascribe pivotal importance to the State was that the State in India is democratic
and representative in character, and that it is the sole effective political instrument to achieve
social equity and justice.14
However, this does not mean that there was no alternative thinking on development available
in India during that time. There were quite a few who strongly held that the Gandhian idea of
development based on economic and political decentralization is best suited for India.15 There
were also powerful votaries like Sardar Patel (the first Home Minister of free India) and C.
Rajagopalachari (the founder of Swathantra Party) who championed the cause of a classical
model of free enterprise and market economy.16 Besides, the neo-Gandhian socialists like
Rammanohar Lohia and Achutha Pathavardhan forcefully advocated the idea of intermediate
technology and small unit machines to achieve historically appropriate model of development in
India.17 Yet, Nehru’s viewpoint on free India’ development prevailed as he headed the Indian
State.
14 Gopal, S. “Jawaharlal Nehru – A Biography,” Oxford University Press, New Delhi, 1989.15 Alavi, Hamza. “India and Colonial Mode of Production,” Economic and Political Weekly, (special number) Vol.X, No.33, 34, and 35, November, 1975, Pp. 1235-1262.
16 Chandra, Bipin. The Rise and Growth of Economic Nationalism in India, Peoples Publishing House, New Delhi, 1982.
17 Lohiya, Rammanohar. Marx, Gandhi, and Socialism, Rammanohar Lohia Samatha Vidyalaya Nyas, Hyderabad, 1962.
Failure of the development agenda in India
The development model that India adopted after independence until early 1990s did not
produce the expected results. It was not only unable to eliminate some of India’s most crucial
problems but also added a few more to them. Obviously, trickle down effect did not take place.
The process of industrialization due to the uneven social structures in India was lopsided and
benefited only the dominant groups in the society. As a result, the gap between the rich and the
poor, the urban and the rural, men and women, upper strata and the lower strata in the society
began to increase. The supposed effective State intervention and planning did not materialize to
the extent it was expected. In a sense, what really happened in India during those years was, as
A. G. frank puts it, ‘development of underdevelopment.’18
After independence, India, as a Welfare state, laid down the welfare and development
obligations in the Directive Principles of the State policy. While making Welfare policies, as
already pointed out, it followed the footsteps of dominant western theories with a received vision
of development as experienced by the West. This effectively sidelined the possibilities of
deploying indigenous and context-specific modes of structuring or restructuring of Indian
18 See Bardhan, Pranab. Political Economy of Development in India, Oxford University Press, New Delhi, 1984; Bannerji, Nirmala. "Whatever Happened to the Dreams of Modernity? - The Nehruvian Era and Women's Position," Economic and Political Weekly, 33.17 (1998) WS 3-4; Sen, Anupam. Industrialization and Class Formation in India: A neo-Marxist Perspective on Colonialism, Underdevelopment and Development, Routledge, London, 1982. See also Frank, A. G. On Capitalist Underdevelopment, Bombay: Oxford University Press, 1975; and Dependent Accumulation and Underdevelopment, The MacMillan Press Ltd, London, 1978.
society, and of managing its development.19 20 This negligence of and insensitivity to the unique
problems and historically specific conditions of India by the State is one of the main reasons why
the development policies and welfare measures failed. Even though many of these policies and
measures were targeted to improve the conditions of the poor and marginalized, they did not
reach them.
At least four inter-twined reasons could be identified for this failure. In the first place, the
development policies and welfare measures of the Indian State was based on the liberal political
philosophy and its economic counterpart of neo-classical development ideology. Secondly, such
a received political philosophy could neither accommodate indigenous modes of development
pursuits nor would strive for radical restructuring of society and economy. Thirdly, since the
capitalist classes, the urban middle classes, and the rural land owning classes predominantly
constituted the Indian State, it could not but be subservient to the interests of the affluent sections
of the Indian society. Finally, the State informed by liberalism could only treat the society as a
passive receiver of programmes and their benefits than as an active participant in the decision-
making process of development and welfare. Thus, the State that operated on the principles of
derived ideas of development; for the interests of the affluent sections of the society; and through
the top-down approach to planning and development, was probably historically destined to fail to
deliver aspired results. The chronicle of India’s stride in the path of ‘development’ or
19 Arrora, Dolly. “Addressing Welfare in Third World Contexts - Indian case,” Economic and Political Weekly, April 29, 1995, p. 955.
20 Riley, M John. Stakeholders in Rural Development, Sage Publications, New Delhi, 2002, p. 35.
‘underdevelopment’ is not drastically different during the era of globalisation. Instead, her
problems became acute and compounded with the new conditions emerging out of globalisation.
Globalization and its impact
As has been discussed in the first part, globalisation is a huge and unprecedented
phenomenon that has shaken the world as a whole. Supporters of globalisation hail it as a great
leap forward in human advancement and a grand accomplishment in human civilization.
However, the critics of globalisation hold divergent views about its nature and impact. Some of
them argue that globalisation is a horrendous development causing misery, displacement, and
marginalisation to the vast majority of people. In other words, it perpetuated ‘eternal smile on
one side of the visage of the world and frozen tears on the other side.’ A few other critics tended
to believe that the process of globalisation is irreversible and that we have to live with it. Yet
another group of critics think of possible human intervention in the process of globalisation to
create another world. Further, those critics who try to go into the historical antecedents of
globalisation hold at least two identifiably different views regarding its origin and historical
development. One section among them argues that the history of globalisation is the culminating
phase of the history of late capitalism. Another section strongly contends this argument by
emphasising that globalisation has no history, no past, and no antecedents. It is ‘a bolt from the
blue.’
In India too globalisation has aroused mixed reactions. It has been hailed as a panacea to
all kinds of problems that India confronts today. A few hold that globalisation in India, as is
elsewhere, is an entirely new phenomenon that cannot be explained away in terms of out
fashioned theories of modernization. However, some others argue that in India it is merely an
accelerated and aggressive form of modernization. As an aggressive form of modernization,
globalisation has led to the opening-up of the economy enabling the entry of a large number of
new and more formidable economic actors. It has also significantly reduced the span of State
activity in India, at times even resulting in the shrinking of national sovereignty. As a
consequence of this, the modernization agenda of the post independent India began to slowly
lose its welfare focus. This, in turn, has not only aggravated the already existing dichotomies,
contradictions, and structural inequalities, but also added a few more to them.
III
In this general historical setting of India’s journey through modernization, development
and globalisation, the researcher intends to take up and explore the issues with regard to the
changing patterns of state’s involvement in the processes of economic globalisation. What is
intended to be highlighted is how these new patterns of state’s involvement has resulted, on the
one hand, in a redefinition of national sovereignty and, on the other, the increasing departure of
the state from the aspirations of the people. This huge development, the paper wants to illustrate
by taking up three major instances of state participation in the process of economic globalisation
in India. They are: (a) Emergence of coalition politics and the resultant pro-active role that the
federal states play in India; (b) The emergence of new competition among federal states in India
with regard to capital inflow and Foreign Direct Investment; and (c) The dawn of Special
Economic Zones and the interest of Federal States in it. The net result of all these is the
increasing estrangement of the state from popular interests and aspirations.
The entry of globalisation in India has vastly redrawn the map of Indian politics. Indian
politics under globalisation witnessed a paradigmatic shift from single party dominance to
coalition politics.21 Such a major shift in Indian politics invariably brought about new equations
and new equilibriums of power. It is not a coincidence that the coalition politics emerged around
the same time of the entry of globalisation in India. The new economic order that globalisation
caused has its effects on the nation state and its internal politics. India cannot be an exception to 21 The nature of party system in India has always been a matter of debate among political scientists, as India never represented any of the classical models of party system. In order to capture the complexities and contradictions of the party arrangements in India Rajani Kothari had invented a conceptual category called ‘single party dominance.’ See Kothari, Rajani. Politics in Modern India (revised ed), Orient Longman, New Delhi, 2002.
this. One major outcome of coalition politics is a visible decline in the power of the central
government and a conspicuous upsurge of federal states. These newly empowered federal states
not only enjoyed greater autonomy in their respective regions but also are major stakeholders in
the central power alignments. Consequently, India under globalisation saw, on the one hand,
drastic weakening of national government and, on the other, the active presence of national and
trans-national economic powers and regional or federal governments transforming themselves as
economic actors. These developments have three fold impact: a) the concept of a developmental
nation state is consistently undermined; b) national as well as trans-national capital have begun
to occupy vital spaces and bestowed upon themselves the responsibilities of development; and c)
regional or federal governments have become transmission belts to accommodate and woo these
national and trans-national economic interests.
Another major instance of the changing patterns in state participation in the process of
economic globalisation in India is the emergence of new competition among federal states with
regard to inflow of internal capital and foreign direct investment. We can see this in the intense
competition among some of the leading federal states in India. It is interesting to note that
globalisation facilitated new competition among federal states in India to have the best of
internal capital inflow and foreign direct investment in their respective regions. However, this
competition among federal states is by no means ‘an ideal type’ as classical economics envisages
it. Instead, it is a highly lopsided inflow in terms sectoral emphasis, and skewed in terms its
distribution among federal states. The lopsidedness is seen in the inflow of internal capital and
FDI into sectors like finance, insurance, IT, etc. Its skewed distribution is determined by the
federal state’s capacity and preparedness to woo and receive. This is clearly revealed in only
few federal states receiving the bulk of internal capital and FDI in those specified sectors. The
preparedness of federal states to invite both national and trans-national capital is dependent upon
incentives offered, infrastructure created, facilities provided, etc. This obviously calls for the
federal states reprioritizing development agenda of the region and allocation of budget
accordingly. This phenomenon unravels two aspects that have far reaching implications. First,
the nation state and its sovereignty is seriously damaged as federal states are independently
pursuing their supposed regional interests by aligning them with global economy with utter
disregard of national sovereignty. Instances of the heads of federal states independently visiting
abroad and lobbying for foreign capital corroborate this. Secondly, federal states have also
progressively alienated themselves from local popular interests and aspirations.
The third major instance is the dawn of Special Economic Zones and the interest of Federal
States in it. The new phenomenon of Special Economic Zone (SEZ) overwhelming India today
has enabled the federal states in India to become competing economic actors both in the realms
of foreign direct investment and national capital. The striking feature of this development is that
the federal states in their bit to have SEZs go out of the way to entice national and trans-national
capital at the cost of local conditions, necessities, and aspirations. This process obviously has
lead to disastrous consequences of federal states completely ignoring their responsibility of
sustainable regional development by sacrificing agriculture and other sustainable livelihood
possibilities. Consequent result of all this is that the issues of sustainability and balance, crucial
for both regional and national development, have disappeared from the sphere of popular
authority and are replaced by the dominant global economic interests.
IV
Conclusion
The thrust of the foregoing discussion is to suggest that the processes of globalisation and
the subsumed agenda of development built into it have serious implications on certain
substantive aspects of our civic and political life. The paper tried to draw attention to three such
major implications on Indian society, economy, and polity. First, the processes of globalisation
have radically divorced the agenda of development from issues of social welfare, economic
justice, and sustainable people oriented development and turned it into an effective vehicle of
global capital. Secondly, these processes have substantially altered the conception of the nation
state and national sovereignty to facilitate uninterrupted flow of capital to usher in the era of
domination. Finally, it has transformed the federal states in India into major economic actors
competing for a cozy place in the global economic order.