Question

Describe the four practices of the globalization project (outsourcing, displacement, informalization, recolonization) Who benefits from them? Who is disadvantaged?

Answer 1

Outsourcing:-

Outsourcing involves the relocation of goods and services production as a cost-reduction strategy and a means to increase operational flexibility of an organization. It is symptomatic of two related processes: “deregulation” and the hypermobility of capital, and the transformation of employment—often in the form of casualization. The latter includes accessing “informal” labor, discussed in a separate section. Under neoliberalism, in addition to corporate outsourcing, governments outsource service contracts to reduce public expenditure and/or privilege the private sector. GATS and IFIs promote this

kind of outsourcing, often with the effect of transferring monopoly power over the management of utilities to corporations, and outsourcing “governance” functions to NGOs. Thus a 1998 World Bank loan to the Dominican Republic, requiring privatization of its power sector, passed the generation and distribution of electricity to Enron, among other companies. Following rate increases between 51 and 100 percent, citizens refused to pay, and the state stepped in to subsidize the price increases, at additional cost to taxpayers of $5 million a month.With payments in arrears, Enron’s subsidiary induced blackouts (including

schools and hospitals), leading to deepening protests, eight deaths, and a massive sell off by the Dominican government of its remaining power assets at

almost a $1 billion discount.3 Similarly, when the South African government

outsourced Telkom, the state telephone company, in 2003, it completed the

privatization of this essential service, which already had increased tariffs for

poor households while slashing rates for rich families and firms, and cut 80 percent of new land lines because of the inability of poor subscribers to pay.And in 2001, Philippines President Arroyo broke up and outsourced the state-owned National Power Corporation, following threats from the IMF and the Asian Development Bank to withhold credits worth nearly $1 billion. Here, “legislation, which privatizes the state distribution system, does not privatize the associated debt. Filipino taxpayers will continue to shoulder the burden.

Displacement:-

In the shadow of globalization lurks a rising dilemma: the casualization of labor and the redundancy of people. Despite, and perhaps because of, an expanding global economy, numbers of unemployed (including hard-to- count long-termunemployed) in the global North have risen from 10 to almost 50 million between 1973 and the early twenty-first century.This is the dilemma of structural unemployment, where automation and/or outsourcing of work sheds stable jobs and where redundant workers cease rotating into new jobs. It is matched across the world by other forms of displacement, including SAP-mandated dismantling of ISI sectors, forced resettlement by infrastructural projects (e.g., 1.9 million peasants will be resettled in China’s Three Gorges Dam project),3 civil wars, and the destabilization of rural communities by market forces (dumping of cheap food, corporatization of agriculture, and decline of farm subsidies). From 1996 to 2001, 40 percent of state-owned industrial enterprises disappeared, displacing36million workers mainly female. At the turn of the twenty-first century, one billion workers (one-third of the world’s labor force, mainly Southern)were either unemployed or underemployed. Displacement begins with depeasantization, a process synonymous with modernity. Ruling and trading classes have always viewed the peasantry as expendable, and the development narrative sustains the unsustainable assumption that peasants are redundant in the modern world. It is uncontestable that agriculture is the main source of food and income for the majority of the world’s poor. While about 3.8 billion people directly depend on the agricultural sector, more than half of the south’s population is agrarian,rising to 85 percent in some of the poorest countries.

Informalization:-

The globalization project is Janus-faced. It exaggerates the market culture at the

same time as it intensifies its opposite—a growing culture of informal, or marginal, activity. This culture involves people working on the fringes of the market, performing casual and unregulated.oftenoutsource labor, work- ing in cooperative arrangements, street vending, or pursuing what are deemed illegal economic activities. Those who are bypassed or marginalized by devel-

opment often form a culture parallel to the market culture. The question of whether informal culture is a real alternative or simply an unrecognized or impoverished margin of the formal culture depends on the context. For example, revival of subsistence farming may improve living standards over working as a rural laborer existing on the urban fringe, as long as land is available. Marginalization is closely associated with forms of displacement—for example, cycles of expansion and contraction of formal economic activity, or the concentration of resources in fewer corporate hands, generates informalization.

Global Recolonization:-

The globalization project is realized through quite selective mechanisms of

accumulation, dispossession, and neglect. Neglect includes the incapacity of debt-stressed governments to support communities that do not contribute to accumulation. Poorer states, with borrowed funds earmarked to promote

exports to service debt, are unable to subsidize sectors and communities on

the margins. In sub-Saharan Africa, total debt servicing amounts to four times

the amount spent on health and education. A Commission for Africa report,in 2005, noted that “African universities were in a ‘state of crisis’ and were failing to produce the professionals desperately needed to develop the poorest continent.Vulnerable regions have no real channels of representation,

especially in Africa, where the nation-state has always been an arbitrary and

“uncomfortable fit.” There, postcolonial states, overly centralized and milita-

rized, have generally served as instruments of wealth extraction—a condition

exacerbated by neoliberal policies weakening civic institutions. The latter are

replaced by unrepresentative networks of NGOs (the new “civil society”),managing the outsourcing of “governance” (and seasoned civil servants) with privately funded projects, leaving behind low-paid government workers, “with the inevitable consequences of corruption and an explosion of ‘parallel

businesses.’”83 In turn, the formal democratization of African states, coinciding with severe SAPs,has shifted responsibility on electorates themselves for state failures associated with policies imposed byun elected international financiers.

The globalization project has many social and political consequences and

implications for the future of the world. We have examined just four phenomena: outsourcing, displacement, informalization, and recolonization. None of these is unique to the global project. They have all appeared in previous eras but not on the scale found today. They are linked indeed, they are mutually conditioning processes, being four dimensions of a single process of global

restructuring affecting all countries, although with local variation. Some observers see informalization as a counter- movement to the official economy and to state regulation asserting a culture of the “new commons.” Informalization of both stripes, withdrawal from corrupt, ineffectual, and/or predatory states, and marginalization by selective corporate “cherry-picking” of local resources, is endemic in Africa today, which perhaps illustrates that colonization is a permanent feature of a world system premised on accumulation. Our task is to specify how that works, and tounderstand that development evolves through different forms and relationships of inequality.