Understanding Globalisation

Understanding Globalisation

Globalisation is far more than just the fact that countries have always had connections with each other. India, for instance, had significant links with the rest of the world from very early times. Western capitalism itself was built upon and maintained through global control over other countries' resources, as happened under colonialism. The real question is whether globalisation is simply about global interconnections, or whether it represents something deeper — significant changes in the capitalist system of production, communication, the organisation of labour and capital, technological innovations, cultural experiences, ways of governing, and social movements. These changes are significant even if some patterns were already visible in early capitalism.

The communication revolution, in particular, has transformed the way we work and live in countless ways. A simple definition of global interconnection does not capture the intensity and complexity of what globalisation actually is.

Although economic forces are an integral part of globalisation, it would be wrong to suggest that they alone produce it. Globalisation has been driven forward above all by the development of information and communication technologies, which have intensified the speed and scope of interaction between people all over the world. There was also a political context within which it grew.

To understand it properly, we need to look at the different dimensions of globalisation — economic, political and cultural — separately, while remembering how closely connected and interconnected they actually are.

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The Different Dimensions of Globalisation

The Economic Dimension

a. The Economic Policy of Liberalisation

In India, the terms liberalisation and globalisation are often used together. They are related but not the same. In 1991, the Indian state decided to bring changes in its economic policy, and these changes are termed liberalisation policies.

Globalisation involves a stretching of social and economic relationships throughout the world, and this stretching is pushed by certain economic policies. Very broadly, this process in India is termed liberalisation. The term liberalisation refers to a range of policy decisions that the Indian state took since 1991 to open up the Indian economy to the world market. This marked a break with the earlier stated policy of the government to have greater control over the economy.

After independence, the state had put in place a large number of laws that ensured the Indian market and Indian indigenous business were protected from competition from the wider world. The underlying assumption of such a policy was that an erstwhile colonial country would be at a disadvantage in a free market situation. Liberalisation of the economy meant the steady removal of the rules that regulated Indian trade and finance regulations. These measures are also described as economic reforms.

Since July 1991, the Indian economy has witnessed a series of reforms in all major sectors — agriculture, industry, trade, foreign investment and technology, the public sector, financial institutions, and others. The basic assumption was that greater integration into the global market would be beneficial to the Indian economy.

The process of liberalisation also involved taking loans from international institutions such as the International Monetary Fund (IMF). These loans are given on certain conditions. The government makes commitments to pursue certain kinds of economic measures that involve a policy of structural adjustments. These adjustments usually mean cuts in state expenditure on the social sector — health, education and social security. There is also a greater say by international institutions such as the World Trade Organisation (WTO).

b. The Transnational Corporations

Among the many economic factors driving globalisation, the role of transnational corporations (TNCs) is particularly important. TNCs are companies that produce goods or market services in more than one country. These may be relatively small firms with one or two factories outside the country in which they are based, or they could be gigantic international ones whose operations criss-cross the globe.

Some of the biggest TNCs are companies known all around the world: Coca Cola, General Motors, Colgate-Palmolive, Kodak, Mitsubishi, and many others. They are oriented to global markets and global profits, even if they have a clear national base. Some Indian corporations are also becoming transnational, though what this trend may mean for the people of India as a whole is not yet clear.

c. The Electronic Economy

The 'electronic economy' is another factor that underpins economic globalisation. Banks, corporations, fund managers and individual investors are able to shift funds internationally with the click of a mouse. This new ability to move 'electronic money' instantaneously carries with it great risks. In India, this is often discussed with reference to rising stock markets and also sudden dips because of foreign investors buying stocks, making a profit, and then selling them off. Such transactions can happen only because of the communication revolution.

d. The Weightless Economy or Knowledge Economy

In contrast to previous eras, the global economy is no longer primarily agricultural or industrial in its basis. The weightless economy is one in which products have their base in information — as in computer software, media and entertainment products, and internet-based services. A knowledge economy is one in which much of the workforce is involved not in the physical production or distribution of material goods, but in their design, development, technology, marketing, sale and servicing. This can range from a neighbourhood catering service to large organisations involved in providing services for professional meets like conferences to family events like weddings. We now have a host of new occupations that were unheard of a few decades ago — for instance, event managers.

e. Globalisation of Finance

For the first time, mainly due to the information technology revolution, there has been a globalisation of finance. Globally integrated financial markets undertake billions of dollars worth of transactions within seconds in the electronic circuits. There is 24-hour trading in capital and security markets. Cities such as New York, Tokyo and London are the key centres for financial trading. Within India, Mumbai is known as the financial capital of the country.

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Global Communications

Important advances in technology and the world's telecommunications infrastructure have led to revolutionary changes in global communication. Some homes and many offices now have multiple links to the outside world, including telephones (landlines and mobiles), fax machines, digital and cable television, electronic mail and the Internet. Not everyone has access to these, however — this is indicative of what is often termed the digital divide in our country.

Despite this digital divide, these forms of technology do facilitate the 'compression' of time and space. Two individuals located on opposite sides of the planet — in Bengaluru and New York — can not only talk, but also send documents and images to one another with the help of satellite technology.

The process of globalisation is giving rise to a network and media society. To create global interconnectedness more efficiently, the Government of India has initiated an ambitious programme in the form of 'Digital India', in which every exchange will incorporate digitisation. It will transform India into a 'digitally empowered society' and a 'knowledge economy'.

Cellular telephony has grown enormously, and cell phones are a part of the self for most urban-based middle class youth. There has been a tremendous growth in the usage of cell phones and a marked change in how their use is seen.

The Digital Divide in Numbers

Globally, the use of the Internet increased phenomenally in the 1990s. In 1998, there were 70 million Internet users worldwide. Of these, the USA and Canada accounted for 62%, while Asia had 12%. By 2000, the number of Internet users had risen to 325 million. India had 3 million Internet subscribers and 15 million users by 2000, and this has now increased to 700 million.

According to a study in 2017–18, one in ten households have a computer at home. About a quarter of all homes have internet connectivity via mobile phone or other devices. These figures themselves indicate the digital divide that continues to prevail in the country, despite the rapid spread of computers. Cyber connectivity had largely remained an urban phenomenon, though widely accessible through cyber cafés. Rural areas, with their erratic power supply, widespread illiteracy and lack of infrastructure like telephone connections, still remain largely unconnected.

India's Telecommunications Expansion

When India gained Independence in 1947, the new nation had 84,000 telephone lines for its population of 350 million. By 1980, India's telephone service was still bad with only 2.5 million telephones and 12,000 public phones for a population of 700 million; only 3% of India's 600,000 villages had telephones. However, in the late 1990s, a sea change occurred. By 1999, India had installed a network of over 25 million telephone lines, spread across 300 cities, 4,869 towns and 310,897 villages, making India's telecommunication network the ninth largest in the world.

Between 1988 and 1998, the number of villages with some kind of telephone facility increased from 27,316 to 300,000 (half of all villages in India). By 2000, some 650,000 public call offices (PCOs) provided reliable telephone service, where people could simply walk in, make a call, and pay the metered charges. These had mushroomed all over India, including remote, rural, hilly, and tribal areas.

The emergence of PCOs satisfies the strong Indian sociocultural need of keeping in touch with family members. Much like train travel in India, which is often undertaken to celebrate marriages, visit relatives, or attend funerals, the telephone is also viewed as a way of maintaining close family ties. Most advertisements for telephony service show mothers talking to their sons and daughters, or grandparents talking to their grandchildren. Telephone and cell phone expansion in India serves a strong sociocultural function for its users, in addition to a commercial one.

Initially in the late 1980s, cell phones were looked at with distrust (misused by criminal elements). As late as 1998, they were perceived as luxury items (only the rich can own them, so owners should be taxed). By 2006, India had become the country with the fourth largest usage of cell phones. They had become so much a part of life that students were ready to go on a strike and appeal to the President of the country when denied cell phone usage in colleges.

In 2020–21, due to the COVID-19 pandemic, lakhs and lakhs of children began using cell phones and attended online classes.

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Globalisation and Labour

A New International Division of Labour

A new international division of labour has emerged in which more and more routine manufacturing production and employment is done in Third World cities. The example of the Nike company illustrates how this works.

Nike grew enormously from its inception in the 1960s. It began as an importer of shoes — the founder Phil Knight imported shoes from Japan and sold them at athletics meetings. The company grew into a multinational enterprise, a transnational corporation. Its headquarters are in Beverton, just outside Portland, Oregon. Only two US factories ever made shoes for Nike. In the 1960s, they were made in Japan. As costs increased, production shifted to South Korea in the mid-1970s. Labour costs grew in South Korea, so in the 1980s production widened to Thailand and Indonesia. Since the 1990s, India produces Nike. However, if labour is cheaper elsewhere, production centres will move somewhere else.

This entire process makes the labouring population very vulnerable and insecure. This flexibility of labour often works in favour of the producers. Instead of mass production of goods at a centralised location (Fordism), we have moved to a system of flexible production at dispersed locations (post-Fordism).

The Example of General Motors

General Motors produces an ostensibly American car such as the Pontiac Le Mans. Of the showroom price of 20,000 dollars, only 7,600 dollars goes to Americans (workers and management in Detroit, lawyers and bankers in New York, lobbyists in Washington, and General Motors shareholders all over the country). Of the rest:

• 48% goes to South Korea for labour and assembly
• 28% to Japan for advanced components such as engines and electronics
• 12% to Germany for styling and design engineering
• 7% to Taiwan and Singapore for small components
• 4% to the United Kingdom for marketing
• About 1% to Barbados or Ireland for data processing

Globalisation and Employment

Another key issue regarding globalisation and labour is the relationship between employment and globalisation. Here too we see the uneven impact of globalisation.

For middle class youth from urban centres, globalisation and the IT revolution have opened up new career opportunities. Instead of routinely picking up B.Sc./B.A./B.Com. degrees from colleges, many young persons are learning computer languages at computer institutes, taking up jobs at call centres or Business Process Outsourcing (BPO) companies, working as sales persons in shopping malls, or picking up jobs at the various restaurants that have opened up. …