Structural Revolution in International Business Architecture: Political Economy: Volume 2 PDF
Preview Structural Revolution in International Business Architecture: Political Economy: Volume 2
Structural Revolution in International Business Architecture Structural Revolution in International Business Architecture Political Economy: Volume 2 Dipak Basu Nagasaki University, Japan Victoria Miroshnik Tsukuba University Graduate School of Management, Tokyo, Japan © Dipak Basu and Victoria Miroshnik 2016 Softcover reprint of the hardcover 1st edition 2016 978-1-137-53576-4 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6–10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2016 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978-1-349-57338-7 ISBN 978-1-137-53578-8 (eBook) DOI 10.1057/9781137535788 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Basu, Dipak R. Structural revolution in international business architecture : volume 2: political economy / Dipak Basu, Victoria Miroshnik. pages cm Summary: “Structural Revolution in International Business Architecture Volume 2 fills important gaps in the existing literature of management science by providing new and improved methods of optimal control system modelling. These research methods are applied in a variety of problems of management science and national economic management. Applications are on oil field development, energy system modelling, resource modelling, time varying control of dynamic system of national economy, and investment planning”—Provided by publisher. 1. International business enterprises. 2. Commercial policy. 3. Economic development. 4. Management. 5. Globalization. I. Miroshnik, Victoria, 1969– II. Title. HD62.4.B375 2015 338.8'8—dc23 2015018410 Typeset by MPS Limited, Chennai, India. To My parents Walter and Tanya with love VM My aunts Mamata Sen and Krishna Dutta with respect DB Contents List of Figures and Tables viii Introduction 1 1 Implications of Structural Revolution 2 2 Structural Revolution in Russia 22 3 Chilean Revolution 41 4 Globalization and the Philosophy of Life in India 50 5 Globalization and the Philosophy of Life in Japan 65 6 Aims of the New International Business Order 79 7 Victims of the New International Business Order 90 8 Empire of China 129 Conclusion 142 References 147 Index 158 vii List of Figures and Tables Figures 2.1 GDP growth rate, USSR 23 2.2 Industrial production growth rate, USSR 24 2.3 Growth and investment, Russia 25 Tables 1.1 Trade restrictions by economic group, 1997–2000 9 1.2 Exports and GDP, 1980–2000 11 1.3 Population living below US$1 per day in developing countries 1990 and 1998 12 1.4 Sub-Saharan Africa: evolution of employment in the formal sector during the early adjustment phase 14 1.5 Informal employment as % of labour force (non-agricultural) in early globalization, selected countries in Latin America 15 1.6 Wage dispersion and real wage changes in manufacturing in early globalization 16 1.7 Composition of social sector expenditures 17 1.8 Trends in the selected social indicators 18 viii Introduction The economic reform programme was started by the International Monetary Fund (IMF) and World Bank a long time ago—first in Africa. The aim was to have a structural reform that would make the global economy more efficient. It was not declared, at that time, what it would mean in practical terms, but instead a number of critical remarks were made against the planned economic systems and their inefficiency. The espoused aim was to remove obstacles against efficient running of the economy. Gradually, and particularly since 1991, after the collapse of the Soviet Union, it was clear that by ‘efficient economy’ the IMF and World Bank meant a free market system of capitalism, not a social market system of European style. That doctrine was enhanced with the establish- ment of the World Trade Organization (WTO) to create a revolution in the trade, production and capital flows in a world unrestricted by any sense of nationalism. This book is the analysis of the historical process in the first phase of globalization as promoted by the World Bank, IMF and WTO. Globalization of production aims to achieve allocative efficiency on a global scale, irrespective of national interests. In that framework, the financial needs of the developing countries and the transitional economies of the ex-socialist countries for their economic develop- ments will be determined by the multinational companies. In this new international business order, how the affected countries can progress and adjust their production and trade are very important questions. Conflicts of interest between various trade blocs and between owners and users of resources are inevitable. The tendency is there to create some new imperial order to gain control over resources and markets. In such conflicts there are many victims. This book has tried to analyse that new colonization process and the ongoing conflicts in various parts of the world. 1 1 Implications of Structural Revolution It is essential to understand the philosophy of ‘globalization’. Globalization signifies the ultimate rights of multinational companies to allocate resources according to their own criteria of efficiency, which may or may not correspond to the national culture of the countries in which they are operating. During the colonial period, before the Second World War, the rela- tionship between the multinational companies and the corresponding host governments was similar to that between the agents of the oppres- sor and the oppressed. The doctrine of free trade was used to justify that aim so that host countries would accept domination of their sovereign rights in exchange for economic growth. This chapter examines the overall trends in structural conditions and their effects related to the international business policy in IMF- supported adjustment programmes during the early days of globaliza- tion. Structural reforms, economic reforms and globalizations mean the same thing; they imply a free market system for the world as a whole and for each nation. With a free market system, worldwide production systems can be achieved. This is the ultimate purpose of ‘globalization’. The aim of the IMF, the World Bank and the World Trade Organization (WTO) is to create free market systems for each national economy. In order to understand the nature of this transformation process, it is essential to understand the philosophy of globalization. An economic system can be successful if it corresponds to the host country’s culture or philosophy of life—otherwise it will die out sooner or later. Thus, it is essential to examine whether the globalization process corresponds to the basic doctrine of life of the people. From the mid-18th century to the mid-20th century multina- tional companies from Britain, France, Holland and Belgium achieved 2 Implications of Structural Revolution 3 globalization; later, during the early 20th century, followed by Japanese and German multinational companies, in their respective colonies. The British East India Company forced Indian farmers to produce indigo and opium for sale to China in order to purchase silk and tea. Britain used to invest their tax revenues from India to build railroads in the USA and industries in Brazil and Argentina. There was a huge mobil- ity of labour too. Indian and Chinese slaves (or indentured labourers) were employed on the sugar plantations in the West Indies and Latin America, in railroad construction in Africa and in mining in Australia and South-East Asia. The European multinational companies, since the 18th century, have created the European empires. Hudson’s Bay Company in north America, Dutch East India Company in Indonesia, British East India Company in China and India, Cecil Rhodes mining company in Africa and Anglo American Oil Company in the Middle East are some of the examples of multinational companies supporting their respective governments to gain colonies, which are now called the ‘developing countries’. That type of globalization was halted only when, after the Second World War, the Soviet Union became the victorious power in Europe, a large number of colonies became inde- pendent and an alternative and very successful strategy of economic development, ‘planned economy’, became the model for the newly independent countries. When the power of the Soviet Union was at its zenith during the 1970s, the developing countries asserted themselves to implement a ‘new international economic order’, so that they could reverse the adverse terms of trade of their exports. This was maintained historically by the developed countries as the source of exploitation. However, with the destruction of the Soviet Union, the power of the so-called ‘group of 88’ developing countries disappeared and it was pos- sible for the developed countries to impose a very new international business order through three very powerful international organizations: the International Monetary Fund (IMF), the World Bank and the WTO. This so-called ‘new order’ or globalization means re-establishment of the old order that prevailed before 1945. Thus, it should be obvious that a minority will gain while the majority in the developing countries experience great loss, because the world in the 21st century seems to have regressed to the 19th century. Multinational Companies and National Economies During the colonial period, before the Second World War, the thesis put forward by Hobson (1902), Bukharin (1917) and Lenin (1917)
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