Tuesday, November 10, 2009




(Published in the Romanian Journal of International Affairs, Bucharest Volume VI 1-2 , October , 2000 )   by Amb (Retd) K. Gajendra Singh


Fortunately, the Cold War turned out to be only a tabletop exercise for a nuclear war dress rehearsal ,since both the sides were capable of wiping out each other many times over and others too. But in the process the Soviet Union led effort to maintain military parity with a richer and industrially more advanced USA drained Russia's economic sinews , made worse by a  geriatric and inapt leadership. And under M. Gorbachev the Russians caved in equally ineptly . But since the Fall of the Berlin Wall in 1989 , business has continued as usual  ,even more vigorously ie promotion of political and economic monopoly of the West in general and USA in particular . Transfer of over hundred billions of US dollars from Russia and other Communist countries to Western Banks and Institutions would go down in history as perhaps the greatest confidence trick of late 20thcentury under the charade of globalisation, liberalisation and democratisation.


A recent joint study ( June 2000) prepared by the World Bank, IMF and OECD and the United Nations  concluded that poverty , inequality and insecurity have increased in the world since globalisation was launched. The number of people living in absolute poverty has increased from a billion five years ago to 1.2 billion . For more than 30 of the poorest national economies, real per capita incomes have been falling for the past 35 years. Asia is the only region in which poverty rates decreased during the past five years. Economic progress in Latin America was vitiated by the increase in inequality, a global phenomenen .People in the industrial countries are now 74 times richer than those in the poorest. The wealth of the three richest men in the world is greater than the combined GNP of all of the least developed countries - 600 million people. Quite obviously it has resulted from deliberate policy choices made by the governments of the advanced economies - chiefly, U.S.A pretending to act in good faith but really in their national interests , in particular interests of financial and corporate communities in its political constituencies. The current controversy in the European Parliament over 'Echelon' spying system which allegedly passed  information on European companies to help US and British counterparts shows that narrow economic interests always prevail .


Globalization ,much heralded since early 1990s as panacea has turned out to be a glib-lisation of economic and social problems of the people in former socialist countries with the so called shock therapy reducing  millions to penury and misery .The middle classes have been decimated with wealth and power becoming concentrated in the hands of a few , ironically mostly former Communist leaders or apparatchiks or their friends. After a disastrous decade ,Russia under a sick and mostly drugged Boris Yeltsin ,a major actor in the break up of the Soviet Union ,who presided at the sucking away of its industrial and economic power without any returns , there is now some resemblance of resistance to New International Order Americana. The return to power of former Communists and socialists, many under new labels , even  in far off Mongolia , has confirmed the rejection of globalisation by the electorates. Their disenchantment with democracy is indicated by low turnout at elections. On the 10thanniversary of the fall of Berlin wall ,cynical if not outright hostile attitude of East Germans high lighted the failure ( and perhaps naivete) of the economic might of Federal Germany to transform its Eastern part .The collapse of economies in South East and East Asia and elsewhere who have followed the dictates of IMF and other western financial institutions have exposed the inherent flaws in a evolving and now not so well understood capitalism and its being touted as a panacea for all economic ills.


Regrettably the Capitalist world glorying in the defeat of Communism has proved to be  very short sighted and hypnotised by its victory advocated the efficacy of globalisation of capitalism .The so called reforms have been turned into privatistion of public assets into the accounts of new rulers or of their friends and relatives 'with everyone looking for a fast buck'. The swindling of life savings of millions in get rich quick pyramid schemes ,failure of pseudo-banks and free fall of currency values with the regime's connivance if not  participation are living examples of loot. There is little transparency leading to unfair practices. There is little regulation and rule of law. Local Mafias and others attracted from elsewhere have linked up with officials and are spreading their tentacles . The expanding Russian mafias  reach into Western nations and have Governments in Europe and even USA worried.


Ill gotten gains are transferred to the West making the new leadership a hostage to western blackmail by selective leakage ie corruption around Yeltsin's family. And who will pay for these massive debts. The starving poor Russian masses , who else. The situation is the same in other former socialist countries .When Romanian Banks collapse following loans of billions of dollars gifted to cronies of politicians and still entrenched communist party cadres ,it becomes a  public debt. The Ossies ( East Germans ) say that the property of East German state has been gobbled up by 20 families from the West. In Russia the oligarchs are still busy distributing state wealth and property among cronies . While masses groan in utter poverty and penury, with GDPs halved since 1989 , what remains is being  pocketed by the new robber elite .With industries closed, former  Communist countries have been Africanised and reduced to at best exporter of semi-finished goods and consumers of western goods for the new elites.


Yes , one can see the symbols of victorious capitalism every where, glittering neon lights of Coca Cola, KFC , MacDonalds , Tuborg and even Sony and Daewoo splattered all over in former socialist countries .Western media led by Radio Liberty and Free Europe during the Cold War had convinced most East Europeans and Russians that they were the lost Christian brothers whom West wanted to liberate from the tyrannical and atheist communist regimes .Those who could go to the West returned with glowing stories of freedom and shops full of undreamt goodies. When they could see Hollywood soap operas , they naively thought  that once they had democracy and capitalism everyone would live in luxury with only board-room and bedroom battles to take care of  and life would be a round of night clubs, casino bars, soda fountains and bowling alleys . So many set up rows after rows of snack shops , Casino bars and kiosks selling the same soft drinks , beer and hard liquors with fancy names like Sheriffs, Texas, Hollywood, Bingo ,Pall-mall or Chez Gabi. But unlike Hollywood serials there are few customers. Except some from foreign trade ministry or state export enterprises the rest had no idea at all of how to trade, run a business or industry. So they are learning by doing -the hard way. Businesses opened with great fanfare and glittering facades have downed shutters. Now deserted and abandoned along with silent and rusting industries they have become remains of the vanquished in the Cold War. And living examples of an American dream turning into a night mare .


Yes, there is a democratic constitution ,a  sort of  multiparty system, liberal and global economy. It was fervently preached that market driven economy will usher in unlimited prosperity. Yes, for 5/6 % of the population, the oligarchs , wheeler dealers and unscrupulous smart Alecs, exploiting old party networks and few newly elected faces . But for the majority the reality has turned out to be very bitter, harsh and brutal leaving people confused and disoriented, selfish and jittery ,apathetic and depressed .Life is a dreary unmitigated misery with falling employment, rising inflation .Pensions of retired intellectual elite ie professors, military officers, engineers have been reduced to pittance  while  prices are at par with West Europe . Yes, the shops are full of imported goods but, only to watch .For the majority ,freedom of speech ,that too not every where (say in Central Asia) has been too heavy a price . Words like globalisation, shock therapy and democratisation have become hated . Social engineering in reverse has reduced  a socialist middle class and intellectual elite to penury and starvation .Yes , now they can have passports for the asking but would get no visas from Western Embassies and if they do reach there , they are promptly deported back .Still  the younger scientific and technological elite from Romania and other East European countries and even Russia has managed to flee , thus denuding their mother countries of much needed leadership. With the lure of being allowed entry into EU (at a shifting date ), Governments in East Europe  have been asked to keep the Arab and Asian barbarian hordes out, who deny visas even to genuine business men . In most of Europe there is a growing emergence of racism and anti-Semitism ,which had been kept in check under communism and even in West Europe.


Unfortunately the most unfortunate development with long term devastating consequences is the precipitous fall in educational standards in technical and medical education where tens of thousands students from developing countries in Asia, Africa and the Middle East (but even from the West in Romania ) used to study in  polytechnics and universities. But shrinking budgets for education leave little money for labs or books with Professor's salaries declining to a pittance. With life becoming a struggle ,there is little teaching .Instead teachers try to earn money otherwise and elsewhere neglecting their vocation .So the new engineering and medical graduates might be literate but are uneducated. Health services have almost collapsed . The cultural life, of  which the communist countries were rightly proud of , with very high standards in music, ballet and theater , have also suffered. With no role models and no discipline or regulation , the young have become apathetic or taken to enjoying themselves . The upper crust new generation is becoming consumer oriented ; materialistic ,crass and crude .


While it took communism 50 years (and 70 years in Russia , the ever pragmatic Chinese jettisoned the economic part after 3 decades) , unbridled capitalism let loose on hapless and unprepared populace has discredited itself in a decade only. In early 1990s the Western media used to joke that communism was the most tortuous and hardest path from capitalism to capitalism, It now appears that the short period capitalism would turn out to be the most tortuous path from Communism to authoritarianism or worse. People have lost faith in future and become disheartened. Not that people want naked communism back, but there is nostalgia for old days among the elderly who miss the social equality and security system ; almost free medical aid , housing and subsidised food . In a recent poll in Russia 42% said they would prefer a communist system, 13% even opted for dictatorship and only 26% expressed happiness with European democratic way .In Romania , majority of people say they were better off under N.Ceausescu .The story is similar in most other former communist countries.


With the emerging oligarchs and senior nomenclatura with their political and speculator counterparts abroad becoming the new robber barons in the Russian Federation ,the  wry joke going around  Moscow is "What the communists had said about communism was all wrong but what they had said about capitalism is all true." Socialism and communism by siding with the toiling workers gave them dignity , hope and rights against ruthless exploitation even in capitalist countries . In a reversal of irony ,if the communists in the name of the masses (proletariat) took away wealth and property and distributed control and perks to the party faithfuls , the globalisation of capitalism has led ,in the name of market place , to the distribution of state property and wealth to old power wielders , new oligarchs and collaborators, who it is hoped will protect capitalism from within .Ultimately ,elite old or new always comes atop , in the name of  the masses , for whom the theatre of absurd  continues to be staged .Surely the human intellect will come up with something more compassionate and equitable ,as it has always in the past ,than the final victory of Capitalism and 'End of History'.            .


How one misses Pravada and Izvestia, not that they propounded truth (Pravada) but the so called free Western media was careful and comparatively honest .Now , with its monopoly it functions without any restraints .The brainwashing  monopoly of western propaganda has wrought havoc around the world . Along with its collaborators elsewhere, it pounces on those who point out excesses of capitalism or its lies. It can buy opinion makers in poorer countries through education-al grants , well paid seminar trips to the West or simple bribery and selective management of Western owned and dominated media conglomerates operating around the world .A clear example of power (to brainwash and mislead) without accountability .As if orchestrated , in total unison the western media continues to sell the myth of capitalism and globalisation as an  answer to all ills since early 1990s in spite of the results to the opposite.


But in spite of media's bombardments or selective silence the truth can not be hidden . Recently some western  journalists like William Pfaff have felt anguished enough to write about NATO lies about its air war over Kosovo a year ago and posed questions: What other lies were  told? Newsweek published what it says are the suppressed findings of a U.S. Air Force investigation into the results of the air campaign against Serbian army forces in Kosovo. Last year NATO had claimed that it had destroyed 120 tanks, 220 armored personnel carriers and 450 artillery pieces in 744 ''confirmed'' air strikes. In Washington, Secretary of Defense William Cohen had said these attacks had  ''severely crippled [Serbian] military forces in Kosovo by destroying more  than 50 percent of [their] artillery and one-third of the armored vehicles.'' The reality, according to the new air force report, is that NATO destroyed 14 tanks, 18 armored personnel carriers and 20 artillery pieces - more or less what the Serbian government had said at the time, which was dismissed by NATO as Serbian ''disinformation''. And the Yugoslav TV station was bombed for 'telling lies'.


Alas, the disinformation was coming from Brussels and Washington. And what a cacophony of lies , half truths and distortions were daily broadcast by CNN, BBC and even Euro-news . While support to NATO's illegal invasion by miniscule countries was highlighted, condemnation by Indian Parliament of the largest democracy was ignored. Now there is so little coverage in the same western media about the ethnic cleansing of Serbians from Kosovo or damage and destruction to their churches that too , most unfortunately under the cover of UNO. Where does Western media stand having been hand in glove with NATO spokesmen last year and earlier with the Coalition powers against Iraq in 1990-91 with little investigation on how nearly 100,000 to 150,000 Iraqis were killed , many while retreating .The massive media monopoly is one of the most dangerous development of globalisation since the Fall of the Berlin Wall . And the arrogance of almost total power to manipulate is frightening in consequences and sickening. 


Of course unlike after the 2ndWorld War , at the end of the Cold War, there was no alternative political and economic system to frighten the USA and thus there was no Marshal Plan (and the money ?, considering the costs for East Germany alone!).Also it is doubtful if it would have succeeded everywhere in the absence of a receptive economic soil. It takes a few generations to establish respect and obedience for laws on property, commerce, banking , stock exchange and to have the requisite economic institutions and  infrastructure in place . And what about the human resources . West Europe was rebuilt by the capitalist ethos ,culture and human resources with Marshal Aid and Japan by its human resources and Samurai pride .In India it has taken  3 generation to transform a basically trading house (GD Birla) into an industrialist one (Aditya Birla) . And what about the exploitation of its own poor classes (read Charles Dickens England) or captive colonies and markets for capitalism to develop and flourish. There is a limit to telescoping in time economic and social human change.


Even regarding the Chinese model of economic development, i.e. to keep the political system under control and provide economic development as in South East Asia it might be remembered that majority of the investment was made by the overseas Chinese community in Asia partly motivated by patriotism. Many of them have been wiped out after the economic collapse in Asia and the continuing crisis. In any case the Chinese capitalistic production is limited to massive Free Trade Zones .Does it have capitalistic roots in most parts of the country, ie property and other economic laws , institutions and infrastructure and human resources ( MBAs). The Chinese have a tendency, in spite of being very hard-working and pragmatic people, of occasionally going berserk; whether it is cultural revolution or leap forward or blooming of thousand flowers. One has to watch the structural tensions between booming economic progress in South and South East China under almost total laissez faire conditions and the retention of the old system in North and North West China. Of course China with a long history and tradition with 1.2 billion population remains a fascinating enigma and source of anxiety. USA would like to tame it , which can , perhaps ,be done by bringing it into WTO. It would strengthen reformers against party hard liners and ideologues . An unmoored China ,which can not be ruled out , is a nightmare for friends and foes alike . Globalisation has been used to hobble Russia from military competition for some time .The scare of matching expenditure on Star Wars , which made Gorbachov surrender , can be revived from time to time as a 'Sword of Damocles' .


And what are Capitalism and its best form .Does a layman understand it? Until a few years back Japan was considered a role model even for the West .Now it is in the dog house .There was full some praise for the young tigers of Asia .While monopoly of US power and its multinationals is sedulously encouraged abroad, it is cut down at home .After the earlier famous breakup of Ma Bell telecommunication monopoly US government is doing the same to Microsoft now. The fundamental tenants of Capitalism of free movement of capital , technology and labour in a Free Market Place is allowed only for the first two .The recent tragic discovery in Dover of over 50 Chinese dead in a truck was only the ugly side of  'natural movement of labour' . Yes ,trained professionals in whom their countries have invested tens of billions of dollars are welcomed or rather seduced .Then apart from subsidised farm products which Europe and USA dump on the world , to keep their agriculture lobbies happy , there is resort to phony anti-dumping or ban on 'inflammable' synthetic Indian skirts or invoking of labour laws to protect their own industries. While Bill Clinton and Parrot quibbled about loss of a few thousands jobs in election debates , West expects reformers or former Communists turned 'democrats and free marketers ' to let millions down the poverty line-only a dip in the prosperity curve drawn by Business school  shock therapists - and get re-elected democratically. It is not an easy dilemma for most leaders of former communists states. And no easy solutions seem to be in sight.


Now the very concept of capitalism as panacea for all problems and countries is being questioned ,rightly , even in the West, after the collapse of economies in East and South East Asia , followed by crisis in Brazil . They had followed all the rules prescribed by IMF and other Western Institutions . In 1998 during the gravest global economic crisis in a half-century there was furore when Malaysian PM Mahatir defied the conventional wisdom of the inter-national financial community by curbing free flow of hot money which had played such havoc with the economies of SE Asia .He brought in strict short-term capital control measures, made the ringgit non-convertible , set up three agencies - for corporate debt restructuring ,for asset management and for refinance etc . Malaysia's recovery was almost as dramatic as it was full-blooded .Only then he was grudgingly praised .India escaped the ill effects of globalisation because of  less opening out to world economy and the maze of regulations which act as a bottle neck helped by a vociferous leftist opinion and a free Parliament . It might still cushion India in future in spite of vested interests who promote liberalisation and privatisation , for without full transparency they can make a fast buck .


In the triumphalist thesis of globalization, a rising economic tide was supposed to raise all boats and suggestions of trade-offs between economic-efficiency and social imperatives were  seen as an unacceptable interference with the free play of market forces. The social dislocations created by globalization were only the unavoidable manifestations of change ( economic collateral damage ! ).The wide spread street demonstrations by NGOs against WTO conference in Seattle last year were against the interests of industry, financial institutions, and international corporation taking over riding priority in politics and international relations over the well beings of whole communities and highlighted the excesses of the present day capitalism. Many reports even by West dominated Financial Institutions are now accepting that their policies and advice harmed the developing countries .Have  not the IMF and the World Bank become flawed institutions.


Perhaps a solution could lie in regional economic groupings to counteract powerful trading and negotiating blocks like EU and NAFTA in the Global Bazaar. In November 1999, in a meeting in Manila , leaders of China, Japan , S Korea and 10 ASEAN states , took steps for closer economic integration and even discussed proposals for a Security Forum .Only  the squabbling South and Central Asia ,divided Arab world and a marginalised Africa remain unprepared to meet the challenges of the century .There is need for a study an Economic Community for Aryan and Turkic speaking Countries (ECARTUC ).The  region comprising of ECO and SAARC may be  beset with problems not only of economic development but of ethnicity, territorial and border claims and other disputes , but culturally, linguistically, ethnically and spiritually there is no region in the world that has so much in common with a continuous history . A cradle of most civilizations and religions of the world , Indo-Iranian and Ural- Altaic languages mingled with each other and local languages to produce a mosaic of new languages and tongues .There would be many problems and obstacles but it may be pointed out that during the first half of 20thCentury millions of Germans , French, British and others were killed by each other in wars , but since the creation of an European Economic Community ,all such disputes have been subsumed into peaceful economic rivalry and competition and there has been peace in Central and Western Europe.


In August/Sept 1998 the very bastions of capitalism were reduced to utter panic and incoherence after the collapse of East and South East Asian economies , the decimation of the rouble and impending fall of the Brazilian economy .On September 8, The Washington Post under the title " Rethink Capitalism "wrote,' What is frightening about the world's current economic troubles is a sense that rules we thought we understood don't seem to apply now. Until a few months ago, we thought we knew what a developing country had to do to join the ranks of the wealthy. We thought we knew how a Communist country could transform itself into a capitalist one. The general understanding was that as the world became more connected, it also would become more prosperous. Now, with Russia and much of Asia having crashed, with Eastern Europe and Latin America imperiled and with much of Africa going backward, the certainties of only a year ago seem far from certain.—'Some other headlines around the same time were 'Global Capitalism, Once Triumphant, Is in Full Retreat 'by Robert J. Samuelson in Newsweek' ,'In Russia, the Liberal Western Model Has Failed 'by Martin Malia in International Herald Tribune etc. There were similar articles in Foreign Affairs of CFR, Washington and other journals . After chiding Asians for their crony capitalism , in Sep 1998, LTMC a big US Investment firm run by two 1997 Nobel Prize Winners for Economics (derivative trading?) had to be bailed out as its bets around  the world amounted to US$ 100 billion .Perhaps in expatiation Amritya Sen was given next years prize for his writings on famines and democracy.


One casualty of globalization of economy and spread of the info tech is abysmal track record of economists whether it be the Asian economic  turmoil or the prolonged American boom. It appears that the unexpected and continued good US economic performance was based on the productivity increase by the revolution in computer and internet use in its trade and industry, apart from its economic and coercive clout , which it unnecessarily exercised in the 1990-91 Gulf War , when a peaceful solution was possible. In his forthcoming book ''The Edge of Now.'' David Howell Chairman of the House of Lords Committee on Common Foreign and Security Policy says" Of course, modern economic theory always had its flaws and limitations, being by its nature abstract and generalizing in its attempt to describe and predict complex and diverse patterns of human behavior. But it is becoming clear that the information revolution has vastly accentuated these weaknesses - to the point where the whole conceptual edifice which once appeared to explain so well how societies worked and could be ''managed'' is suddenly dissolving into irrelevance. The problems go even deeper than having the wrong models. The real difficulty is, and has been all along since the rise of ''scientific'' economics as a so called discipline, that the economy is not a static entity or closed system, as too many theoretical analyses like to assume. It is a fluid and evolutionary process, driven by discovery and innovation and now becoming very much more so under the impact of wave after wave of new technology. Larger and larger parts of it have moved beyond economic measurement altogether. ---' 'The problem arises when 'if the figures are false or unreliable and relate to entities and aggregates which may no longer even exist in real time and space, then so are the policies derived from them and so are claims of politicians and governments that the economy is being somehow managed.


'The best explanations of economic events and responses would now appear to lie outside the conventional world of prevailing economic concepts and thought processes. It is possible that we should be revisiting a quite different kind of economics - such as that espoused by the neglected Austrian school of economists, who had marvelously unorthodox ideas, years before their time, about what drives economic progress; or the small and growing band of ''institutional'' economists who are beginning to look beyond the mechanisms of macroeconomics altogether to grasp what is actually happening.--- Does this persistent failure to explain, on the part of a profession whose practitioners only yesterday seemed to be the masters of the universe and to have the ear of every policymaker, really matter?-- . Not only is it becoming tortuously difficult to define the boundaries of any one economy. An even greater problem is the all-pervasive nature of what is now the most dynamic element in modem production - the intellectual capital embodied in information techno-logy.--- So if there is one obvious starting point in the learning curve of e-governance that authorities and policymakers are now being urged to climb, it should surely be to discard and escape the deformities of thinking imposed by conventional economic theory and its increasingly shaky statistical foundations.'


Perhaps , figuratively speaking , introduction of computers and internet and globalisation has introduced a concept akin to 'Theory of relativity ' in human economic phenomena and decision making over simple erstwhile 'Newtonian 'economics .Hence it is not easy to comprehend and tabulate as before . Certainly growing use of Microchips is making it the next most important raw material ,whether it is industrial production ,trade or Missile Defence , after ( a) Grass -which made Indo-Europeans on chariots and Turks and Mongols on horse back rulers of Asia and Europe  ,(b) Gun powder -Europeans and Chinese  and ( c) Uranium -Europeans led by USA ; and USSR and China and now India and Pakistan .


The present day leadership of the Capitalist world could at least be modest .In August /September 1998 they were saying that capitalism had failed , then recession was the best bet . And viola ! against all expectations US economy continued and continues to grow  .Now a whopping US $ trillion surplus in revenues over next 10 years , twice the forecast  made only 4 months earlier. .Suppose it was $ trillion loss and Capitalism was about to collapse or had collapsed , a possible nightmare expected 2 years ago. What about hundreds of millions if not billions in the world who would have been gravely affected .Going from poverty line to below starvation .US and the rich West can survive controlling disproportionate raw materials, means of production and wealth compared to its population .The Anglo-Saxon elite would not be affected ; the shock will be taken by Hispanic and Afro Americans communities .Perhaps a major problem in a world with only one superpower USA, is the totally managerial and legalistic outlook of its leadership geared to  annual balance sheets and responsibility to the stockholders. Through this so called globalisation and WTO what is being sought is not the ideology of free trade and universal prosperity but a politically distorted adaptation of the classical trade theory owed to Adam Smith and David Ricardo and to their followers.  And it overlooks an ethical and holistic long term view for the international community as a whole , on which it purports to establish a 'fair and equitable ' new international order .Unlike the leadership and vision shown for those times by Roman , Ottoman or Moghul emperors . Such a narrow tunnel vision apart from increasing misery every where , also spreads environmental degradation in the universe.


                                               Amb (Retd) K. Gajendra Singh . 12 July , 2000. Bucharest ( Romania)