Soc 222, 9th class

SOC 222
Millennial Reckonings
(2000s--)
Chapter 8
PhD Fatma Altınbaş Sarıgül

Globalization Project in Crisis
□ Arrival of austerity policies in the Global North
raises some key questions:
□ What does this mean for northern “development”?
□ Does this undo the conventional distinction between
“Developed” and “Developing” Countries?
□ Is this signal crisis of the globalization project the beginning
of a transition towards a new project?
□ Is peak oil a threshold for development, exiting the age of
fossil fuels and entering an era of energy constraint and
conservation, upending development as we have known it,
ushering in a new regime based on militarized security or
democratic resilience or something in between?
© SAGE Publications, 2011.

Situating the Economic Crisis
Facing the Global North
□ Debt crisis of the North recycles 1980s debt crisis in
the South
□ The end of the development state in the South
□ Anti-state syndrome spread to the North
□ Example: Reduction in corporate taxes; rollback in public
services; decline in stable employment
□ Unemployment has become the great leveler
across the North/South divide
□ Simultaneous hollowing out of Northern economies
and relocation of goods and services production to
the South
□ Result: Unstable world; wealthy withdraw allegiance to
their nation states; social rebellions

Development Facing A
Legitimacy Crisis
□ Millennium Development Goals (2000):
□ Halving world hunger by 2015
□ Halting the spread of HIV/AIDS
□ Addressing gender inequality
□ Providing universal primary education
□ 2010: Progress towards 2000 MDGs stalled
□ Despite a general reduction in absolute
poverty, there has been an expansion of
global inequalities between and within
countries

Legitimacy Crisis
□ Development agencies unable or unwilling to
address growing inequalities
□ The object of concern is not global inequality but
global poverty, the instrument of analysis is
economic data processing, and the bottom-line
remedy is freeing up market forces, now with a
human face
□ Exemplified in the fixation on “bottom billion:”
□ Produces unequal relationship; focus on poor
rather than poor nations as development targets
□ Targets the poor with instruments of the rich, like
micro-finance © SAGE Publications, 2011.

Microfinance or Poverty Capital
□ A double edged sword: reproduces the “bad
state/good market” ideology of the globalization
project
□ Embodies the neo-liberal philosophy of devolving
responsible for development to the individual as the self-
maximize
□ Originated in non-profit organizations such as
Grameen Bank
□ Evolved as “poverty capital,” as commercial banks,
investment vehicles and money markets have embraced it
□ Enabling savings within poor communities is more
effective than credit provision (followed by debt)
□ Many examples of community-managed microfinance via
local cooperative banks and financial institutions with
accountability to local savers and the wider community

Arab Spring?
□ High unemployment among youth created a
discontent with the globalization project
□ Tunisia: Revolt began among working class youth, spreading
to the middle class as police brutality came in view
□ Pre- history of labor struggles, especially in Egypt
□ Countries holding strategic significance for US more
likely to ignore their social contract with the citizens
□ More successful in crushing protests (Bahrain).
□ Revolution in Tunisia reinserted “social inclusion” into
the center of the development debate
□ Regarded as a macro- economic success by development
agencies, persistent socio- spatial inequalities were ignored.
□ After the revolution, a “social inclusion” component part of
the loan package in Tunisia and Egypt

Geo-Political Transitions
□ Rise of the Group of 20 leading economies
reflects new realities of power and authority.
□ Formed as fall-out from 1997 Asian financial crisis
□ Brazil, Russia, India and China contribute more
than 50 percent to world-economic growth
□ Account for about 15 percent of the world’s economy
□ 2010: China surpassed Japan as the world’s
second-largest economic power (although the US
produces two-and-a-half times more)

New Realities of Power are
Emergent and Polycentric
□ Interests of the Middle Income Countries (MICs) do
not necessarily converge:
□ Rising commodity prices benefit Russia (oil, wheat,
minerals) and Brazil (soy, oil, sugar, orange juice), but not
India and China.
□ 2009 1st
BRIC summit raised the question of replacing
US dollar as world’s principal trading currency and
reforming financial institutions to reflect balance of
power
□ Also, South-South aid and South-South alliances,
especially among the BRICS (IBSA and BASIC)
 Growing phenomenon of “Chindia”

Economic Revolution in China
□ China’s transformation has been a part of
the globalization project.
□ Majority of the investment is regional, coming
from Japan and the “East Asian tigers” (or NICs)
□ Final assembly station in TNC commodity chains,
which account for 60 percent of products
manufactured in China.
□ Upgraded from low-value to high-value
products
□ Economic model is in transition though with
China now outsourcing to Africa

India: Twist to Globalization
Project
 Shift from global services to domestic
manufacturing
□ Indian education unable to cope with demand for
software operatives; a 30- 40 percent increase in wages,
eroding hi- tech cost advantages.
□ Policy makers focusing on the domestic market of middle
class consumers, requiring expanding employment of low
skilled labor
□ Two- thirds largely agrarian, and a rising middle
class
□ Creates tension and conflict of interests
□ For example, between global retailers operating in
prosperous urban markets versus livelihood security of small
shopkeepers

China and India: Counter-
trend
□ Counter-trend to the globalization project
□ Neither have fully embraced neo-liberal principles,
retain capital and investment controls
□ For example: China’s currency is not freely convertible.
□ India: In the mid- 2000s, the government re- focused on
“inclusive nationalism,” targeting small farmers displaced
by industries, highways and agro- industrial estates.
□ Land acquisition for development purposes have
generated stiff rural resistance, forcing governments to
respond to the needs of the rural population
 Echo Latin American initiatives to control markets
 “Beijing Consensus”: Possible return to development state?

China as a Threat?
□ West views the rise of China as a threat; future unclear
□ Domestically, China faces growing unrest as class
inequalities deepen, peasant question is exacerbated,
and an emergent middle class demands political rights
and democratization of state
□ Internationally, Chinese government enunciated a New
Security Concept in 2004 rejecting hegemonism:
□ More focused on securing resources from various
world regions and constructing a Chinese-centered
regional political economy.
□ The U.S. government and its European allies focus on
India’s potential role as a counterpoise to China in Asia

Financial Crisis
□ 2008: Severe financial downturn was a signal crisis of
the era of “financialization”
□ Investment shifts into financial transactions (mergers,
acquisitions, derivatives) away from good or services
production
□ Huge financial profits in the US and Britain; made
possible by financial deregulation in the late 1990s
□ Economic power shifted to the financiers
□ Most common, derivative financial instrument
created was a security anchored in mortgage
debt, then packaged and repackaged as the debt
was sold and resold by financiers recycling risk
□ Mortgage debt ballooned, untethered by material
underpinnings leading to a foreclosure crisis

Differing Interpretations of
Northern Crisis
□ Conventional American view: Europe, with low birth
rates and longer life expectancy, can no longer
afford its generous welfare benefits
□ Alternative view: Refocus on sovereign debt
represents a final attempt by neoliberal interests to
completely dismantle the welfare state in its various
forms
□ Third view: Permanent state of crisis. Capitalism
thrives on deregulation and risk, to be borne by
citizens.
□ The financial crisis contradicts the claims of universal
prosperity of the globalization project

Food Crisis
□ Rising basic food prices led to food riots across the world in
2007–2008 and during 2010- 11
□ Under the neoliberal food system:
□ South exports high-value foods at the expense of its own local food
supplies, requiring imports of cheap staple foods, which destabilize local
food producers, and reduce their ability to produce more when prices rise
□ Northerners do not feel the price rise as keenly as southerners
□ Food accounts for a larger share of the budget of poor household in
developing countries than in the US
□ Majority of the hungry (65 percent) are in India, China, the Democratic
Republic of Congo, Bangladesh, Indonesia, Pakistan and Ethiopia.
□ Rising food prices signal intensification of energy and food
demand under conditions of peak oil by a class of 1 billion
new consumers in 20 MICs
□ Age of cheap food is widely regarded as over, with
“agflation” bringing the world to a “post-food-surplus era”

Ecological Crisis
□ Richest countries generate 42% of global
environmental degradation while paying only 3% of
the resulting costs
□ Much of the ecological crisis is the consequence of
the separation of the natural from the social
sciences
□ Development theory has been shaped as if human societies have
no ecological basis.
□ Loss of biodiversity suggests that the problem is
deeper
□ Current levels of consumption are unsustainable
and inequitable
□ Low carbon users are most vulnerable to the impact of climate
change © SAGE Publications, 2011.

A Looming Water Crisis
□ Rising gap between demand and supply of water
□ China and India, with one–third of the world’s
population, have less than 10 percent of global water
supply.
□ Problem is exacerbated by melting of the glaciers
in the Himalayas
□ Rapid future increases in the demand for water.
□ Water is predicted to play a similar role to that of oil in
geopolitical resource conflict.
 Agriculture is the flashpoint, since it uses 90 percent of
India’s and 70 percent of China’s water.
□ Water- intensive agriculture adds to the crisis

Three Obstacles To Overcome
□ Objective inequality between and within nations
□ Wealthy citizens can ensure they are least affected
□ 97% of natural disaster-related deaths occurred in global
South
□ Subjective consequence of uneven development
□ Countries of the global south claim the right to exploit
forests
□ Growth rivalries between countries prevent agreements on
equitable and sustainable paths
□ Economism, or the framing of solutions to social and
ecological crises in terms of economics.
□ Development founded in economic language, institutions.
rules
□ Economic measures overwhelmingly privileged as opposed© SAGE Publications, 2011.

Conclusions
□ Globalization project not over, but in transition to another
project: the sustainability project.
□ Series of crises are not uniformly coordinated so much as
expressing the uneven and combined development of
global political-economy.
□ Some crises are specific to the globalization project
(the financial crisis, political rebellions, and institutional
paralysis)
□ Long-term structural crises, such as the food crisis and
of course the climate crisis – registering an era of fossil
fuel dependence.
□ Another shift underway as the West loses ground to the
non- West

Soc 222, 9th class

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