"...the confounding of globalisation with Westernisation is not only ahistorical; it also distracts attention from the many potential benefits of global integration. Globalisation is a historical process that has offered an abundance of opportunities and rewards in the past and continues to do so today. The central issue of contention is (and should be) not globalisation itself, nor is it the use of the market as an institution, but the inequity in the overall balance of institutional arrangements -which produces very unequal sharing of the benefits of globalisation. The question is not just whether the poor too gain something from globalisation, but whether they get a fair share and a fair opportunity....Globalisation deserves a reasoned defence, but it also needs reform." Amartya Sen
In 1991, the debate was finally settled. State cannot exist without market. For nearly 75 years, the Soviets were trying to prove the world that it can. Socialist beliefs like equality of income distribution have been rejected and replaced by libertarian ideas like equality of opportunity, the opportunity to compete and capture the market.
Thomas L. Friedman in the second chapter The Ten Days that Flattened the World of his latest book The World Is Flat: A Brief History of the Twenty-first Century elaborates ten events that has leveled the degree of competition in the Globalised world. He says that the major event that instigated the process of flattening the earth happened on 11/9(1989), the day when the Berlin Wall was brought down signaling the beginning of the end of the Communist movement. The fall of the Berlin Wall created a ripple effect all around the world (including India) paving way for the spread of the globalisation and democracy.
The 1990s saw the unprecedented growth of capitalist ideas. The world, interconnected by Internet, was rapidly shrinking into a global village. The BRIC countries (Brazil, Russia, India and China) and South Africa could make economic progress as a result of globalisation. But the world was alarmed when the Asian Tigers (Singapore, Taiwan, Hong Kong and South Korea) went through the infamous Asian crisis.
The rise of WTO made globalisation and free trade inevitable. But it was widely felt that the West was reaping the success of globalisation at the expense of the third world. “Globalisation today is not working… for many of the world’s poor… for much of the environment… for the stability of the global economy” remarked Joseph Stiglitz, the former Chief Economist at the World Bank and winner of the Nobel Prize for Economics, 2001. Stiglitz, without taking a pro- or anti-globalisation stance, argues that the West has seriously mismanaged the process of privatisation, liberalisation and stabilisation, and by following its advice the Third World is worse off now than was ever before.
The new wave of Financial Protectionism (a new form of economic patriotism), spreading all over Old Europe, mainly Italy and France, i.e. hostility against acquisitions of companies by foreign groups considered of "strategic" value for the economy of the country, by foreign groups (mainly substantiates West’s double standards towards globalisation. The Mittal – Arcelor controversy, the controversy regarding blocking the sale of American oil company Unocal to Chinese Cnooc etc are the best examples of Financial Protectionism.
If Friedman’s book mentions ten events that have flattened the world, then an eleventh event has occurred recently creating another flattening effect which is to shape the way future business will be conducted. Mittal Steel and Arcelor will be merging to form Arcelor – Mittal, the largest Steel manufacturer in the world controlling about 10% of the global Steel market.
On January 27, when Lakshmi Niwas Mittal announced his bid to take over Arcelor, the Arcelor management along with the politicians from France and Luxembourg was enraged. Luxembourg Prime Minister Jean-Claude Juncker had publicly vowed to fight Mittal. Mittal also had to bear racial taunts from Arcelor CEO Guy Dolle like Mittal would fund the takeover with ‘monkey money’. In July 2006, when the Old Europe bowed before share holder pressure and approved the merger, Mittal’s perseverance finally paid off. It was not only a victory to Mittal, but also a victory to Globalisation.
The general perception that globalisation is a western monster has finally been broken. Not even Old Europe could practice Protectionism. The ripple effect of the Arcelor – Mittal merger will now spread all around the world as in the case of what happened in 11/9. The Asian corporate giants will now have the confidence that they can challenge and compete in the Western market and even be the market leader by purchasing western assets.
Mittal will happily agree with Friedman when he says, “Honey, the World is flat”.
