Globalization is not about equalization. Capitalism does not equalize. It is in its nature to create poles of riches and poverty. The Third World was not always there. It was created by Europe for the ends of its colonial expansion
THE only Third World countries to have broken out of backwardness are South Korea, Taiwan and Singapore. They are enclaves developed by the West as a Cold War ploy, to contrast their capitalist prosperity to communist China’s poverty. Of course, the same capitalist system was not able to develop the bigger Indonesia, what to say of India.
We tried the strategy of export-led growth and, for a while, took the import-substitution road. But, like most Third World countries, invariably landed on our back. Today, our textile industry is sick, while a majority of Pakistanis does not have adequate clothing, and millions buy imported second-hand clothes. Our steel mill, one of the bases of any country’s industrialization, is to be privatized, i.e. sold, shop by shop. At the end, there may be a few foundries, serving their localities, but certainly no integrated steel mill. Most of it will go as scrap.
The way we are going for ‘privatization’ and for opening up our markets to foreign goods, indicates that we must be among a few Third World countries which take the slogans of globalization seriously. Globalization is not about equalization, no matter what its ideologues say. Capitalism does not equalize. It is in its nature to create poles of riches and poverty, both within the societies and between the countries and regions. The Third World was not always there. It was created by Europe for the ends of its colonial expansion. If there are any measures within the capitalist societies, mitigating the effects of polarization, they are of extra-economic nature, results of political decisions.
Globalization means the opening up of the economic space of the whole globe to the reproduction of the West’s internationalized capital. It is the subordination of all human activities and all regions to the imperatives of capital. However, while this capital is internationalized, it continues to be anchored in the national territories of the developed countries. So it must result in even greater flow of value from the Third World to the First.
The freedom that globalization seeks for the capital is not for its investment, but for its movement without check. It is not primarily productive capital, but what Keynes called rentier capital, i.e. one not seeking to engage itself directly in long-term investment, not concerned primarily with production. It aims at skimming, through short-term investments or speculation, the surplus created by productive capitals, and moving on. It is a truly fictitious capital, a specific form of finance capital, flitting from one economic space to another, freed of all obligations to either the productive units or to the country concerned.
The only thing globalization can leave behind in a Third World country after it takes away its surplus, is increased poverty, unemployment, despondency and the ruins of what were, at one time, its attempts at development.
Globalization of capital may accelerate the transfer of value from the Third World, but the mechanism of the transfer itself belongs to neo-colonialism, whose essence is unequal exchange. The system is kept in place by dependence, generally referred to as domination.
The integration of a peripheral economy with the world market had been brought about by a re-allocation of the factors of production within it, whose internal effect had been to split the economy, linking its various sectors directly to the world market. Only this way, could it be made to surrender its surplus to the imperial powers.
Globalization does not have a solution to the problem of under-development, as capital operates within and according to the rules of the world market. To quote Palloix: “The dominant economies impose their own law of value upon the market, which is expressed as the law of comparative cost in international exchange, in order to create an international division of labour. This division satisfies the law of value on the dominant economies, but imposes specific forms of the law of value on the dominated economies.” (L’Economic Mondiale, Vol. II, p. 200).
Thus, we return to the original equation posited by Ricardo. The world market registers the law of value of the peripheral economy to evaluate its product. If that evaluation is to be corrected and the price of its product is to be made equal to its value, the allocation of factors of production has to be modified within that economy.
This would enable it to change its place in the international division of labour, and its products would be evaluated in the world market according to its new law of value. The re-allocation would also permit it to re-weld the economy internally and be able to retain for itself the value surrendered hitherto to the economies dominating the world market.
However, these objectives cannot be achieved if a peripheral country continues to be at the mercy of the world market and follow its logic. The change requires auto-centric growth and strong state control of foreign trade, not just tariff levels, but administrative determination of all imports and exports. The objective of these combined measures would be to ensure that the surplus generated in the country is invested in the local economy and does not flow out.
This is not autarchy, though it has some of its features. It is selective protectionism and a strict control over the movement of one’s surplus. Now, protectionism has become a pejorative term, thanks to Western propaganda. The industrialized centre, being newly developed, requires the economic space of the whole world to be opened to the circulation of its commodities. It, therefore, presents the trading policies of its modern period and its theories of comparative advantage to us for emulation.
The policies pursued by it when it was backward are ignored. For example, no deadbody could be buried in Henry VIIIth’s England unless it was certified that it was in a shirt made in England from English wool. Until as late as the first decade of the 19th century, no Indian-built ocean-going ship could enter a British port. All Indo-British trade was carried in British ships.
Actually, autarhcy leads to stagnation. An important percentage of the Third World’s peasants is autarchic, in the sense that it uses over half of what it produces itself. Only a small percentage of its products is exchanged. The reason is that only the surplus can be exchanged and most peasants have a small surplus. As a result, farming is the most stagnant part of the backward economies.
Economic progress starts with differentiation, when industry and agriculture separate and their mutual exchanges are made through the medium of money and the market. But they can benefit from differentiation only if the two partners to this exchange belong to the same economic space, so that their surpluses can be invested within that space, contributing to their development. If they are situated in two separate national spaces, one of which is developed and dominates the process of exchange, the surplus flows out from the backward to the developed space, leaving the backward economy stagnating, in fact, becoming poorer.
Auto-centric growth aims at connecting the various sectors of the national economy with each other in accordance with the principle of growth (or rather development) through differentiation. Here the needs of the people have to be met, as far as possible, from the resources available in the country, through the technology present there. The technology can be developed as a result of the experience gained by the workers, but it can also be obtained from abroad, where local development does not answer the needs of production. Once the economy has been re-welded locally, it can start broadening its links with the world market, but as an internally integrated economy and not a split one. State control of all foreign trade is meant to ensure that unnecessary goods are not imported, and exports pay only for the objectives of the auto-centric development. While the medicines not made in the country are necessary imports, designer clothes and luxury cars are not.
Under our present system, the foreign trade often serves to convert our necessities into luxuries. For example, our best fruits, denied to the Pakistani children, are exported, and, with the money thus earned, luxury goods are imported for our rich under an import regime imposed upon us by the IMF-WB. What may be regarded by the rich as a necessity may not be so regarded by the people. And the trade regime has to follow the general good.
Above all, the state sector has to be the motor of our auto-centric growth. An economy gains control of its economic development by reaching into the backward linkages. It is better to produce needle-making machines than to import needles, and better still to make machine tools, heavy machines, heavy chemicals, steel, electronics goods etc. Our capitalists are not in a position to build these industries. Only the state can mobilize the financial resources, including foreign loans, to do so. It can also ensure the allocation of resources for the industrialization undertaken by private entrepreneurs.
Our society is capitalist and we have to take the capitalist path to development. Talk of socialism in a backward society is utopian. However, state has played a vital role in the development of all capitalist systems, even in the now advanced countries. It cannot be otherwise here.
Globalization is not about equalization. Capitalism does not equalize. It is in its nature to create poles of riches and poverty. The Third World was not always there. It was created by Europe for the ends of its colonial expansion 
