The International Labour Organisation has warned of the likelihood of severe social disruption in the SE Asian countries and Korea. These countries do not have any social welfare systems, and they have no defences against large-scale unemployment. Moreover, inflation is likely to whittle down real wages by as much as 50 per cent over the next few years. There is nothing between the laid-off worker and stark, grinding poverty. When mass unemployment strikes, there is no alternative to social welfare policies.But the problem goes deeper than that. In an era of globalisation, government spending on welfare can lead to a flight of international capital to shores more conducive for capital accumulation. As the ILO knows very well, changes in the mobility of capital and in the conditions of work have led to a situation where there is little both governments as well as trade unions can do for social welfare. Instead of vast assembly lines, so conducive to the growth of labour power, we now have flexibleproduction, more capital-intensive production, and much work being contracted out.
Unemployment has increased dramatically, and the presence of this reserve army of labour inhibits trade unions. Capital has been fleeing the industrial heartlands for cheaper labour in developing countries. The resurgence of neo-liberalism has seen the vast majority of people stripped off their political as well as economic power, reduced to mere labour-power which can be used and discarded at will. At the same time, the richest 20 per cent of the world's population was 61 times better off than the bottom 20 per cent in 1993, compared to 30 times in 1960. Between 1980 and 1989, the share of US private net wealth held by the richest 1 per cent of households increased from 20 per cent to 40 per cent. All this has been achieved at the cost of massive social disruption -- there are 1.5 million people behind bars in the US, fourteen times as many as in Japan.
In the affluent state of California, expenditure on prisons, at 9.8per cent of the state budget, overtook that on post-secondary education in 1994; in 1978, prisons accounted for 3.8 per cent of expenditure while post-secondary education was 14.4 per cent. And a baby born in Shanghai in 1995 was less likely to die in the first year of life and could expect to live two years longer than an infant born in New York. Such is the brave new world of liberal economics. All the more reason for countries such as India to pick and choose its response to globalisation, and put in place the rudiments of a social safety net.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
