Last week, The Economist carried a special 18-page report on world economy titled ‘The gated globe’. On the last page, the report stated: “Globalization’s obituary has been written many times. In the 1970s and 1980s, the multilateral trade system was regarded as moribund or even dead. In 1999, and 2000 international summits were besieged by anti-globalization protests. In 2002, the war on terrorism and the economic slump prompted this newspaper to ask, is globalization at risk?” Fact of the matter is that five years ago the financial crisis had dealt another blow to the globalization, and global capital flows fell from $11 trillion in 2007 to less than $4 trillion in 2012. Many books were written highlighting the downside of globalization. Protests were held in Seattle, Genoa, Prague, Davos and other places wherever the IMF, WTO and World Bank held their meetings. But with the financial meltdown in the US, European economies suffered from the contagion, and the myth of globalization has been exploded.

With the advent of the Industrial Revolution, the developed countries had started colonizing the undeveloped countries of the world with a view to providing raw materials for their industries and the markets for selling their manufactured products. The foundations of free-market capitalism were then laid, and on the infrastructure of capitalism superstructure of democracy was raised. However, after the 2nd World War European countries had become too weak to be able to control the vast areas and regions like Indian sub-continent and many other countries, especially in the face of freedom movements. They were however subjected to neocolonialism; and its latest version globalization generally refers to the period since 1989, following the collapse of the Soviet Union and end of the Cold War era.

Today, globalization is characterized by transcending the national boundaries and state institutions in favor of transnational economic activity. Proponents of globalization have been describing it as a process that cements economic, cultural and political bonds between peoples of different countries of the world. They claim that large-scale flow of commodities, capital, technology and labour has precipitated the process, leading to integrated world market, and what they call global village. But the result was contrary to the much-touted merits of globalization, as it resulted in the creation of global monopolies and cartels through the mergers of Multinational Corporations that were otherwise likely to compete with each other. Globalization, once the popular paradigm of development for European and developing countries, is becoming unpopular even in the western countries. Since 2008 financial meltdown, subtle change is taking place, and many countries are reverting back to protectionism and resorting to capital controls.

David Korten in his book ‘When Corporations Rule the Earth’ published in 1995 described “Multinational Corporations (MNCs) as instruments of a market tyranny that extends its reach across the planet’s living space, destroying livelihoods, displacing people, rendering democratic institutions impotent, and feeding on life in an insatiable quest for money”. Of course, MNCs originating from the US, Japan and the West with surplus capital have been able to expand the market for capital, whereas labor-surplus countries have not been able to expand the market for labor. When these corporations invest in labour-surplus countries, wages are kept at subsistence level, as addition of a few high-tech and automated industries does not create large demand for labor either to solve the unemployment problem or to cause upsurge in wages. These corporations taking advantage of the developing countries’ penchant for foreign investment force their governments to amend labor laws giving them the right of hire and fire.

Sadly, MNCs acquire prime agricultural lands at throwaway prices in the developing countries with the promise to produce the commodities for export and solve their foreign exchange problems. But these corporations focus on cash crops, but the foreign exchange thus earned is spent on import of food-grains. Furthermore, the MNCs have developed genetically engineered seeds for enhancing production, and on the basis of intellectual property rights they charge exorbitant prices for their breed of seeds. As a result, the farmers of Asia, Africa and Latin American countries have further been impoverished, where a great majority of the people is already living below the poverty line. These corporations exert pressure on even developed countries.

That said. Globalization has resulted in the domination of trade and industry of the developing countries by the multinational corporations and that role must be curtailed if we are to see a more stable and promising future.

The writer is a political analyst and freelance columnist.