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Posted: January 11, 2002

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The Impact of Globalization
The Institutionalization of Social Crisis

by Nafeez Mosaddeq Ahmed
 

Introduction

Globalisation is directly responsible for creating an international economic crisis that has resulted in the suffering of billions. Around fifty years ago underdeveloped lands numbered 2.5 billion inhabitants, of whom 500 million suffer from under nourishment. 1.5 billion suffer from malnutrition. As a direct or indirect consequence, 8 million died of hunger annually. At that time the world president of the United Nation’s Farming and Agricultural Organisation (FAO) observed that: “Today two thirds of the inhabitants of the earth live in constant hunger; and about 1,500 million people live on the subsistence level, suffering constantly from the most horrible of social ills.” Today, however, while the global economic system is dominated by neo-liberal policies of liberalisation and deregulation, the numbers of underprivileged and impoverished have only increased dramatically, while the gap between rich and poor has only widened. This paper attempts to gather some of the most salient facts on the devastating consequences of globalisation, clarifying that the conventional opinion of the beneficial nature of the structure of the world economy is a myth. In fact, the global economy systematically produces conditions of social, economic and political devastation for the majority of the world’s population.

I. An Invisible Holocaust

The numbers of undernourished people in the world have been rising for at least twenty years. According to the Food and Agricultural Organisation (FAO), the hungry within the Third World countries outside the Eastern Bloc and China rose by approximately 15 million during the 1970s and by 37 million during the first few years of the 1980s.[1] In 1960, the income of the 20 per cent of the world’s population living in the richest countries was 30 times greater than that of the 20 per cent in the poorest countries. Now we learn that in 1995 it was 82 times greater. In over 70 countries, per capita income is lower today than it was 20 years ago.[2] Children have invariably faced the brunt of these consequences. For instance, the United Nation’s Children’s Fund (UNICEF) reported that:

“[A]pproximately 40 per cent of all the young children who die in the world each year, 45 per cent of the children who are malnourished, 35 per cent of those who are not in school, and over 50 per cent of those who live in absolute poverty are to be found in just three countries - India, Pakistan and Bangladesh.”[3]

A typical example of the dire levels of Third World destitution that have been exacerbated under the neo-liberal policies institutionalised under globalsation is Bangladesh, the country mentioned last in the UNICEF report cited above. Bangladesh has a population of 116 million. In 1988, the United States had an income per person approximately 28 times that of Bangladesh. Even the poorest 20 per cent of the United States population had an income per person 6 times higher than the Bangladeshi average. Bangladesh’s GDP per person corresponds with the average for all 43 ‘least developed’ countries. About 99 million people - approximately 86 per cent of the population - are estimated to live in poverty. From 1965 to 1988, food intake in calories fell from 91 per cent to 83 per cent, while rising during those years for all industrial countries from 124 per cent to 132 per cent. According to official estimates there are about 13 million malnourished children in Bangladesh, with 63 million people lacking access to health services and 108 million lacking access to sanitation. Bangladesh, however, is by no means the worse on the list: There are countries with even fewer resources than Bangladesh. In 1988, 16 countries were listed in the UN Development Program (UNDP) with fewer resources per person than Bangladesh.[4] 

We should consider a few other equally horrifying examples. In Brazil, 40 per cent of the population go hungry, and seven million children work as slaves or prostitutes. In Guatemala, 87 per cent of the population of nine million live below the poverty line, while a quarter of a million children have been orphaned due to political violence. In Mexico, 60 per cent of households cannot meet their most basic needs. In Venezuela, 33 per cent of the population are unable to meet basic nutritional requirements. 90 per cent of the population in El Salvador live in poverty. It is not as if these countries are intrinsically poor; they possess significant natural economic resources. Yet these resources are being plundered by Western investors, with catastrophic results. The global economic system has not in any significant way lessened these problems, but on the contrary has exacerbated them drastically. The conditions of Bangladesh, Brazil, Guatemala, and so on have worsened under neo-liberal programmes. For instance, the UNDP reports that the gap between rich and poor nations doubled between 1960 and 1989.

In 1992, the United Nations reported that: “Some 1.4 billion of the world’s 5.3 billion people live in poverty. Other estimates suggest that including those living ‘along the subsistence margin’ with only minimal necessities increases the number of poor to nearly two billion.”[5] Out of this huge number of critically impoverished people, about 1-2 billion were in developing countries, while about 200 million were in the industrial countries, including about 30 million in the United States and 100 million in the former USSR and Eastern Europe.[6] Years later these figures have reached unprecedented heights.

Today an estimated 20 per cent of the population in the ‘developed’ world consume 86 per cent of the world’s wealth. This means that 80 per cent of the world population have distributed amongst them a paltry 14 per cent of the world’s wealth.[7] To understand this kind of sheer over-consumption attributable to the ‘developed’ world which thereby contributes substantially to this state of affairs, one should consider the fact that a mere $13 billion would be enough to meet all the world’s sanitation and food requirements - this is hardly as much as what people in the United States and the European Union spend each year on perfume. Even while goods are more abundant than ever before, the number of people without work, shelter or enough to eat, continues to steadily increase. Of the 4 billion people who live in developing countries, now almost a third  - that is about 1.3 billion people - have no access to clean drinking water; this is more than a sixth of the population. A fifth of all children in the world receive an insufficient intake of calories and proteins. Around 2 billion people - a third of the human race - suffer from anaemia. Thirty million people die of hunger every year, half of whom, UNICEF estimates, are children. Over 840 million suffer from chronic malnutrition; this is also almost a sixth of the population. Three billion people - that is half the world population - are forced to survive on less than two dollars a day.[8] Of the 6 billion people in the world, only 500 million live in comfort - that is approximately one-twelfth of the world population. This leaves a massive 5.5 billion people living in need - over five-sixth of the population.[9]

This critical situation has been escalating for many years. In 1960, the countries with the wealthiest fifth of the world population had per capita incomes that were 30 times that of the poorest fifth. By 1990, this had doubled to 60 to one. Five years on (1995), the ratio was at 74 to one. Simultaneously, inequality has also escalated within countries. Russia now has the greatest inequality in the world, despite or more precisely as a direct consequences of becoming integrated into the world market. Income inequalities have similarly rocketed within other alleged beneficiaries of the free market, including China, Indonesia, Thailand, and other East and Southeast Asian countries. The industrialised countries, especially Sweden, Britain and the United States, are no exception to this global norm.[10] The respected French current affairs journal Le Monde diplomatique reported in December 1999:

“Whole industries have been wiped out in every region of the world. The result has been social suffering: mass unemployment, underemployment, precarious employment and exclusion. Fifty million unemployed in Europe, one billion unemployed and underemployed in the world as a whole. We have the over-exploitation of men, women - and even more scandalously - children, 300 million of them, in conditions of unprecedented brutality.”[11]

The last point - child labour - is of course especially appalling. Development specialist Susan George relates that half of these millions of child labourers working in “outrageous conditions” are under 14 years old. The ‘advantage’ for corporations is that they receive “three compliant and defenceless children for the price of one adult.” The results of such repression is to drive down wages and replace adults. For example, “In India, the numbers of working children and jobless adults are roughly the same. The practice [i.e. child labour] perpetuates poverty. Today’s working children, if they aren’t already dead, will be tomorrow’s unemployed grown-ups”, whose “own children” will “work in the same sordid conditions.” The practice is, moreover, deliberate. “Plenty of TNCs are ‘outsourcing’ contracts to companies using children.”[12] In all, there are over 250 million children forced into labour throughout the world, poverty being the immediate reason why families send them into labour. They inevitably miss out on education as a result and are consequently condemned to a life of poverty. With the World Trade Organization legislating for the ‘rights’ of corporations in the name of ‘free trade’, nations are unable to prohibit child labour without violating international trade rules enforced by Western institutions. The response of the Western powers to this state of affairs is instructive. The U.S. government for instance has resorted only to the insignificant public relations stunt of requesting companies to adopt a ‘voluntary’ code of conduct. As Terry Collingsworth of the International Labour Rights Fund comments, “asking companies that have benefited from the use of exploited child labor to suddenly become guardians of higher standards is either naive or cynical.”[13]

Such facts, as appalling as they are, do not take into account other factors of severe social injustice. Throughout the world, human repression is being intensified, resulting from the increasing denial by governments of the most fundamental human rights; increasing numbers of people are unable to develop even a small part of their human potential due to the social, political, and cultural conditions in which they live; millions of people have been killed in a ceaseless string of wars and conflicts throughout the world, constantly fuelling international tensions.[14] In summary, the majority of the world population is living in extremely dire straits, suffering from impoverishment, state repression and war, in various combinations.

II. Elite Indifference and Complicity

The rich nations of the North and the rich elites in the South do not have to undertake extreme policies to contribute to the alleviation of the Third World impoverishment that results largely from Northern over-consumption. As the British environmentalist Richard D. North remarks:

“Much of the new wealth in the world goes into armies and Mercedes Benzs and services for the tiny minority of very rich, and does so in a much more marked degree in poor countries than in rich and western nations. It is a paradox that the greatest inequality is to be found in the poorest countries. This is not a trivial inequality. It is not merely that the many are poor and that there are a tiny minority who are rich in huge disproportion to them. Far more important is the fact that the rich minority apportion to themselves not merely huge wealth, but a large proportion of the wealth of their societies. Moreover, the rich minority often feel little obligation to share their well-being. For a sense of this, consider how a 2% rise in taxation of the richest fifth of the population in Latin America would raise all the poor of the region above official poverty levels.”[15]

The UN similarly calculates that the whole of the world population’s basic needs for food, drinking water, education and health care could be covered by a levy of less than 4 per cent on the accumulated wealth of the 225 largest fortunes.[16]

Thus, much of the world’s suffering could easily be reduced by the West, if the West had the will. However, the facts illustrate that genuinely alleviating the poverty that results from the injustices of the global economic order is not on the Western agenda. The World Health Organization (WHO) for example reports that 11 million children die annually due to the unwillingness of the rich to help them. The diseases that these children die from are easily treated. For example, while 4 million children die from diarrhoea, two-thirds of them could be saved from the lethal dehydration it causes with sugar and salt tablets, worth mere pennies. Three million die from infectious diseases, deaths that could be halted via vaccinations at only $10 a head. Hiroshi Najajima, WHO Director-General, observes that this “silent genocide” is “a preventable tragedy because the developed world has the resources and technology to end common diseases worldwide”, but lacks “the will to help the developing countries.”[17]

It is noteworthy that Western-inspired strategies for ‘development’ are similarly insignificant. Indeed, they are often crucial in promoting the wealth of the West to the detriment of Third World countries. For example, although the UN recommends a minimum government aid value of 0.7 per cent of their GNP, hardly any country even attains the minimum. From 1978-1988, the UK’s aid as percentage of GNP fell from 0.48 to 0.28 per cent. Additionally, government aid is usually ‘tied aid’ - given on condition that the recipient country buys specified goods or services from the donor country. To cite a typical example, in 1984-85, two thirds of Britain’s direct aid to India was tied to the purchase of British goods and services. In fact, a substantial part of the money in the British aid-budget provides subsidies to British companies to help them secure Third World countries. In 1991 for instance, three-quarters of Britain’s bilateral aid were tied to British goods and services. Similarly, each pound of British multilateral aid is expected to foster a return of 1.4 pounds - again, via spending on British goods and services.[18] Thus, First World companies secure work and sales instead of those of the Third World, effectively annulling the development of indigenous industries. Another example is Canada’s ‘aid’ to Tanzania from 1970, tied to Tanzania’s purchase of Canadian goods and services. As a direct result of the Canada-instigated ‘development’ strategy, Tanzania’s wheat-farming industry was completely dissolved. Tanzania’s dependence on First World goods and services was the inevitable consequence.[19]

According to The Economist, the “main motive” of aid “has not been to end poverty but to serve the self-interest of the giver, by winning useful friends, supporting strategic aims, or promoting the donor’s exports”. The systematic result is that “the richest 40% of the developing world’s population still gets more than twice as much aid per head as the poorest 40%”, with the vast bulk of aid accruing to “countries that spend most on guns and soldiers, rather than health and education”. Accordingly, almost “half of all aid is still tied to the purchase of goods and services from the donor country”, which “costs developing countries some 15-20% of the value of the aid because they pay higher import prices”.[20]

The growth of Third World debts as a result of Western ‘aid’ in the form of World Bank loans coupled with IMF prescriptions during the past 20 years or so, along with the Third World struggle to service them, has been one of the most crucial factors co-working with international structures and institutions contributing to the maintenance of severe and growing poverty. Third World debts are now so huge and interest rates so high, that for every year since 1983 the Third World has paid out more to the West just to service its debt (i.e. repayments and interest charges), than it has received from the West in new investments and loans. This greatly reduces the money that needs to be spent on health, education, food subsidies and other critical areas of public spending. For instance, between 1983 and 1993, the IMF received $2.9 billion greater than it gave in new loans. One should note that the total international debt owed by the Third World was $100 billion in 1973. Today they owe $400 billion. World Bank and IMF programmes have thus only directly induced the escalation of Third World dependency and impoverishment.[21]

The real meaning of Western ‘aid’ programmes has even been admitted. President Nixon in his 1968 presidential campaign advised his country to “let us remember that the main purpose of American aid is not to help other nations but to help ourselves.” Effectively explaining the meaning of this advice, Eugene Black, the former President of the World Bank who died in 1992, once said:

“Our foreign aid programmes constitute a distinct benefit to American business. The three major benefits are (1) foreign aid provides a substantial and immediate market for United States goods and services; (2) foreign aid stimulates the development of new overseas markets for US companies; (3) foreign aid orients national economics towards a free enterprise system in which US firms can prosper.”[22]

Therefore, as a direct result of ‘aid’, indigenous “goods and services” are undercut, encouraging dependence on the West. This generates a market for Western companies, so that they can “prosper” at the expense of the indigenous population.

The nature of the West’s loans to the Third World should therefore be properly understood as designed to foster Western investment and thereby maximise corporate profits. These loans, and the stringent economic conditions imposed along with them, were never designed to foster independent Third World development, as is clear from both the nature of the policies enforced and the predictable consequences of those policies. Third World masses gain little from the borrowing. On the contrary, they usually suffer from its effects. First World loans have served systematically to entrench corrupt regimes and enrich their economic or military elites, who transfer their wealth abroad in Western banks, while allowing unimpeded Western access to domestic resources. The accompanying IMF conditions mean that money borrowed cannot be spent on measures to alleviate poverty, but will inevitably be used to cultivate Western investment and the infiltration of Western corporations. So while Third World and Western elites mutually enrich themselves, Third World masses as well as taxpayers in the West must bear the burden of repayment. It is the majority of the population who suffer from their countries’ indebtedness, as social programmes are cut short and critical forms of public spending are reduced.

III. Debt Cancellation?

It is therefore worth noting that acceptance by a few Western governments of the Jubilee 2000 call for Third World debt cancellation, while commendable, is no great sign of Western benevolence. The debt is unrepayable in principle. Debt cancellation is therefore not detrimental to the West since the debt would never have been repaid anyway. While Third World countries have been paying out huge sums of money to the West to service their debt, they have not actually managed to repay even a fraction of what they owe - their debt merely continues to increase inexorably. The cancellation of the debt under the pressure and publicity of Jubilee 2000 activists is therefore merely a concession, which can have no long-term effect in terms of genuinely aiding independent Third World development. The global economic system that is responsible for widening inequality and increasing poverty remains firmly in place. Gains, if any, will be short-term, and will soon be superseded by the inevitably unjust impact of normal international economic relations.
 
Additionally, the tenore of history and the structure of global economic relations suggest that the cancellation of the debt will be accompanied by other attempts to compensate for this apparent reduction in Western profits. One should consider the ominous fact that the international vehicle for debt rescheduling and cancellation, the Heavily Indebted Poor Countries initiative (HIPC), is managed by the IMF and World Bank, the two financial institutions whose historical record of fostering Third World development has been systematically catastrophic.
 
The highly praised record can be understood from inspection of a few examples. Mexico is just one country that had been lauded as a triumph of free market principles and a model for others. Then in December 1994 its economy collapsed, leaving most Mexicans in an even more dire state than they were in already during the period of Western manufactured “triumph”. Not long before the December 1997 Asian financial crisis, the World Bank and IMF had similarly hailed the “sound macroeconomic policies” and “enviable fiscal record” of Thailand and South Korea. A 1997 World Bank research report was enamoured of the “particularly intense” progress of “the most dynamic emerging [capital] markets”: “Korea, Malaysia, and Thailand, with Indonesia and the Philippines not far behind.” They “stand out for the depth and liquidity” they have attained through the free market, under Western tutelage. Just as this glowing report appeared, the same models of free market ‘success’ collapsed. Humanitarian promises made by Western governments in response to Jubilee 2000 should therefore be taken with extreme caution.[23]
 
In fact, the alleviation of a certain amount of Third World debt can often be in Western corporate interests. According to the New York Times, the poor condition of Third World infrastructure “has hindered Western companies here, making it hard for them to set up distribution systems for their products”. Accordingly, we may note that Western banks have agreed to relieve 40 per cent of the debt amassed by Poland since 1989, primarily because it “is likely to enhance its economic prospects” - meaning the “economic prospects” of Western companies in Poland who will thus no longer be “hindered”. Latin America is a similar example of the same principle, where debt reduction was “tied to market-opening moves” that “helped to spur growth and attract foreign investment”. Once more therefore, the “growth” accrued as usual to Western investors and the domestic elite, as conditions for the largely impoverished population remained either static or degraded even further.[24] Furthermore, Western governments have refused to cancel debts in accord with their tentative promises. Indeed, as Christian Aid reported in July 2000, “by the time Tony Blair boards his flight to Okinawa, Japan, for the annual G8 summit of world leaders, less than four per cent of the debt relief Christian Aid and others have campaigned for will have been achieved.”[25]

IV. Russia: A Brief Case Study of the Impact of the Free Market

One of the latest triumphant examples of free market discipline in the current global economic system is Russia. At the beginning of the 1990s, the collapse of the Soviet Union and the East European regimes was hailed as a victorious result of free market principles. Russia’s integration into the global capitalist economy and its conformity to the dictates of the free market was supposed to provide a powerful empirical proof of the inevitability and superiority of neo-liberal capitalist policies. The West looked forward to guiding Russia unto the dizzy heights of free market prosperity, and no one would be able to ignore this startling epitome of capitalist economic progress. At last, the so-called myth of an alternative to neoliberalism could be dispatched to the waste-bin of history. As Johannes Linn, the World Bank’s vice-president for the region, commented at a recent conference, “market-orientated reforms, combined with social reforms and institutional strengthening have worked to turn former socialist, centrally planned economies around, and can put them on a sustainable path of economic growth and social inclusion.” An examination of Russia’s free market success should thus provide a particularly ideal perspective on the impact and import of the principles of the Western-dominated world order.
 
In fact, ten years on, the actual outcome of Russia’s entry into the global economy reveals a great deal about the alleged superiority of the new world order of neo-liberalism. A 1999 United Nations Development Program report documents the Holocaust-like scale of the humanitarian catastrophe that has been imposed on Russia as a result of the so-called ‘free market’. One figure is exceptionally startling in itself: 9.7 million men in the countries of the former Soviet Union and Eastern Europe have died prematurely directly due to Russia’s absorption into the global economic system. This humanitarian catastrophe has been accompanied by a virtually endless number of severe problems. Economic output has reduced by more than one half. The rate of poverty has escalated more than eight-fold. The rate of suicides and alcoholism is unprecedented. Diseases that had previously been eliminated, such as tubercolosis, have returned with a vengeance, and new ones like AIDs are spreading rapidly. Millions of people have been displaced. Malnutrition among children is now a normality. A tiny minority has been enriched, with criminal mafias taking control of whole areas of the state apparatus. Despite ten years of this escalating crisis, official publications in the West continue to refer to the Commonwealth of Independent States (CIS) and Eastern Europe as being in a state of “transition” towards higher production and standards of living under privatisation and the free market. The fact of the matter is that the only “transition” Russia is undergoing is towards deepening economic collapse, as is the case with the other countries subjected to the dictates of the free market. In Central and Eastern Europe, gross domestic product on average in 1997 was almost 12 per cent lower than it had been in 1990. In Latvia and Lithuania, it was even worse, with GDP just 59 per cent the level in 1990. As for the CIS, including Russia and Ukraine which have the largest populations, the 1997 GDP was a mere 55 per cent of the 1990 level.
 
According to the UN Development Program report:
 
“The ‘transition’ in most of the countries in the former Soviet bloc in Central and Eastern Europe and the CIS is a euphemistic term for what in reality has been a Great Depression. The extent of the collapse in output and the skyrocketing nature of inflation have been historically unprecedented. The consequences for human security have been calamitous. By conservative estimates, over 100 million people have been thrown into poverty, and considerably more hover precariously just above subsistence.”
 
Thanks to the supreme wisdom of the market, “investment collapsed, output and incomes fell sharply and growth rates became negative.” This has accompanied a “remarkable increase in inequality in the distribution of income…
 
“During the transition period... income differentials have widened considerably and in a number of countries the degree of inequality... now approaches that of the most inegalitarian developing countries. This is conspiciously the case in the largest country, the Russian Federation, where inequality is now comparable to that in some Latin American countries.”
 
The consequence of privatisation has thus been to “create a small and wealthy capitalist class and a highly polarised society”. The distribution has income has shifted “from labour to capital, as well as a sharp widening of the wage and earning differentials.”
 
The report also describes the dramatic reduction in living standards:
 
“The combination of a fall in average incomes and a rise in inequality resulted in a very substantial increase in the incidence of income poverty. Using a poverty line of $4 a day (in 1990 purchasing power parity dollars), the UNDP estimates that poverty in Eastern Europe and the CIS countries increased from 4 percent of the population in 1988 to 32 percent in 1994, or from 13.6 million to 119.2 million. In other words, prior to the transition to a market economy, mass poverty was unknown: all able-bodied people had a job and hence a source of livelihood and an elaborate system of social services ensured that the elderly, the ill and the handicapped were protected from hardship. During the transition, however, the system of social protection became much weaker, unemployment increased and real wages fell. The inevitable consequence was the emergence of widespread poverty and destitution.”
 
For example, in Moldova, from 1990-96, per capita consumption of meat, of milk and dairy products, and of sugar, declined 57 per cent, 48 per cent, and 60 per cent respectively. In Poland, which has uniquely undergone an increase in GDP (apart from Slovenia), 60 per cent of children suffer from malnutrition, and 10 per cent are permanently malnourished. The problem of poor nutrition is also seriously affecting Belarus, the Russian Federation and Ukraine. The prevalence of stunting, for instance - a permanent condition caused by protein-calorie deficiencies in early childhood - increased in Russia from 9.4 per cent in 1992 to 15.2 per cent in 1994.
 
“From 1989 to 1994, for example, the number of Russian women suffering from anemia at the end of their pregnancies nearly tripled. In Ukraine, the percentage of pregnant women with anemia rose from about 11 percent in 1990 to about 34 percent in 1995. A survey in Uzbekistan in 1994 showed that anemia affected about 65 percent of all females between 15 and 50 years of age, 59 percent of all preschool children, 82 percent of toddlers and 75 percent of infants.”
 
Mortality rates have also been on the rise since the introduction of the market economy. From 1980-95, life expectancy in Russia for men dropped by four years - more than in any other country. Life expectancy for males in the Russian Federation is now only 58 years. Birth rates also fell, with the consequence that “corresponding to their economic collapse, the countries in the region confront a dramatic demographic contraction.” Thus, reports the UNDP, the “transition” “has imposed a heavy cost on the people of the region not only in terms of increased illness, higher mortality and lower life expectancy but also in terms of social breakdown, as reflected in increased alcohol consumption, a dramatic rise in drug addiction and an increase in the suicide rate.” The suicide rate for men is in fact higher on average in most countries than in the European Union. While there are, of course, a variety of complex causes for these much greater rates, they are primarily the result of widespread insecurity, which itself is the outcome of the reduction in wages, rising unemployment, increasing economic uncertainty, decline in health services, amongst other factors. “The transition to a market economy”, reports the UNDP, “has literally been lethal for a great many people.”
 
This can be additionally discerned from other facts, such as the rise of disease. The occurrence of tuberculosis doubled between 1993-94 in Russia, while also increasing in Ukraine and Georgia. Sexually transmitted disease has also rocketed to record levels. The incidence of syphilis rose in Russia from 4 per 100,000 people in 1989 to 172 per 100,000 people in 1995. In Eastern Europe, infection rates for HIV rose from 1994 to 1997 at least six-fold; in some of the worst affected areas there was a 70-fold increase. Drunkenness and drug addiction have become similarly rampant throughout the region, also with “lethal” consequences. A 1997 report on Kyrgyzstan, for instance, observed that “drunkenness and drug addiction are acquiring proportions of a national tragedy. It is widely recognized that the high incidence of infant and children’s illness and death is linked to the alcholism of the parents... The prevalence of drug addiction in the last five years has increased by over 300 per cent.”
 
The humanitarian catastrophe is made all the worse by the unprecedented increase in crime. According to the 1999 UNDP report:
 
“[O]ne of the most striking and ominous byproducts of economic collapse during the transition in many countries of the region has been the dramatic rise in crime… In sharp contrast to conditions before the transition, people now find themselves deprived of personal safety and security - often at the mercy of organised criminal forces that have arisen on the basis of collusion with corrupt government officials.”
 
Though recorded crime has increased substantially since 1989, it is worth noting that estimates suggest that only a fraction of crime in the Russian Federation is reported. For instance, in Estonia: “Crime has grown more organised and professional; new types of crime have appeared (e.g. credit card fraud)... As a general trend, criminals seem to be redirecting their interest from violence and assault against property (theft) into the economic sphere i.e. former  ‘street criminals’ try to continue their illegal activities in business.” Elsewhere, in Kyrgyzstan, “The market in criminal services is growing due to hired killings and the racket. In the opinion of experts, the members of different criminal groups are constantly undertaking attempts to penetrate the authorities, including legislature. Economic, official and general crime... is influencing the course of economic and legal reforms. The new economic relations in Kyrgyzstan are leading to new forms of crime.” Similarly, in Tajikistan, the UNDP reports that by 1996, “organized crime became widespread, with the network of criminals forming a state-within-a-state and seizing certain sectors of the economy... Criminals have not only improved their skills, but have graduated theft, forgery and other petty crimes into murderers for hire, hostage-taking and other violent crimes.” There is now a growing “politicisation of crime and criminalisation of politics... Dushanbe is the centre of organized crime and corruption.”
 
The UNDP report finally observes that the “cost of transition” under capitalist free market tutelage has involved “dramatic and widespread deterioration of human security…
 
“Employment is no longer secure, nor are incomes. The old system of full, guaranteed employment is gone, with no prospect of its return. For many people, income poverty has become a way of life for the foreseeable future. People’s place of residence is also no longer stable, with mass migrations occurring within the countries in transition, among them, and to countries outside the region. Regional conflicts and tensions have also augmented the numbers of internally displaced persons and refugees. There has been a tragic breakdown in human security with respect to access to social services and social protection. There is no longer any secure entitlement to a decent education, a healthy life or adequate nutrition. With rising mortality rates and new and potentially devastating epidemics on the horizon, life itself is increasingly at risk.”[26]
 
In this light, the remark of World Bank official Johannes Linn takes on quite a new meaning. Russia’s formerly centrally-planned economy - which was by no means without its own already inherent problems - has now been “turned around” entirely under Western-directed “market-orientated reforms”, and is therefore sliding steadily deeper into an unprecedented economic collapse, with devastating humanitarian implications. This has, however, involved the enrichment of Western investors and a corrupt elite minority within Russia, attributable to Russia’s “social inclusion” into the international capitalist economic system. Of course, the Western media has lambasted Russia’s plummet into social problems by blaming them on the failure to follow through properly with free market reforms. We may, however, note the admission of academic and media commentator John Gray, that the “necessities” of global markets had “wiped out the life savings of 80 per cent of the Russian population”.[27]
 
University of Ottawa economist Michel Chossudovsky encapsulates the reality of the situation well when he states that: “The IMF-Yeltsin reforms constitute an instrument of ‘Thirdworldisation’” - “a careful blend of Stalinism and the ‘free market’”. They are, in fact, “a carbon copy of the structural adjustment programme imposed on debtor countries” throughout the Third World. Yet, “adopted in the name of democracy”, they constitute “a coherent programme of impoverishment of large sectors of the population.” Within Russia, the “collapse in the standard of living and the destruction  of civil society engineered through a set of macroeconomic policy  propositions is without precedent in Russian history.”[28] “Under the masque of liberal democracy”, he notes elsewhere, “the totalitarian state remained unscathed: a careful blend of Stalinism and the ‘free market’ with the IMF and the other instruments of triumphant imperialism [intent] on neutralising a former enemy and forestalling the development of Russia as a major capitalist power.”[29]
 
Janine R. Wedel, an anthropologist and associate Research Professor at Georgetown University where she is affiliated with the Institute for European, Russian and Eurasian Studies, similarly pointed out in 1998:
 
“The United States has consistently supported President Boris Yeltsin and a Russian cadre of self-styled economic ‘reformers’ to conduct Western aid-funded economic reforms and negotiate economic relations with the West… This support continues to the present… The privatization drive… helped to create a system of tycoon capitalism run for the benefit of a corrupt political oligarchy that has appropriated hundreds of millions of dollars of Western aid and plundered Russia’s wealth. Despite evidence of corruption and lack of popular support, many Western investors and U.S. officials embraced the ‘reformers’ dictatorial modus operandi.”[30]
 
While the West’s direct complicity in the infra-structural destruction of Russia is meanwhile ignored, similarly unmentioned are the Western elites who have benefited from the collapse. According to the Wall Street Journal, U.S. aid to Russia amounts to a wonderful “windfall” - not for Russians, but “for U.S. consultants” - leading to “dancing in the streets - though not the streets of Russia.” Unnoticed is the fact that “The chief celebrants” of Russia’s economic downfall are the “hordes of U.S. consultants who are gobbling up much of the U.S. aid pie”, including “between 50% and 90% of the money in a given aid contract”. New trade groups utilise American “taxpayer funds to help American businesses expand in Russia.”[31]
 
The rise in global inequality and impoverishment within the current order has therefore been enormous, systematic and relentless. Western pro-corporate policies are, however, domestic as well as international, resulting in the increase in domestic impoverishment and inequality. Thus, even within the richest countries, inequalities have widened and poverty increased.

V. Poverty and Depression in the West

The people of the Third World countries are not the only victims of globalisation. The Western public is also suffering. Both American and Britain are prime examples of this. The U.S., for instance, which is the wealthiest nation in the world, simultaneously has the widest gap between rich and poor, a gap that is steadily increasing. Such inequalities have been the direct outcome of Thatcher/Reagan-style policies designed specifically to benefit the rich at the expense of the poor. For example, the U.S. government admitted in the 1992 Green Book that the numbers below the poverty line increased between 1979 and 1990 by 1.6 million directly due to cuts in social insurance programmes, and by another 2.4 million directly due to cuts in means-tested welfare.
 
Walden Bello - former Director of the Institute for Food and Development Policy based in Oakland (San Francisco), Director of the academic research group Focus on the Global South and Professor of Sociology and Public Administration at the University of the Philippines - has produced a lucid overview of the exacerbation of inequality and poverty within the U.S. under the impact of neo-liberal policies:
 
“The 1980s ended with the top 20 per cent of the population having the largest share of total income, while the bottom 60 per cent had the lowest share of total income ever recorded. Indeed, within the top 20 per cent, the gains of the Reagan-Bush period were concentrated in the top 1 per cent, whose income grew by 63 per cent between 1980 and 1989, capturing over 53 per cent of the total income growth among all families. Meanwhile, the bottom 60 per cent of families actually experienced a decline in income.
 
“... [I]n 1989, the top 1 percent of families earned 14.1% total income, yet owned 38.3% of total net worth and 50.3% of net financial assets. The wealth distribution has also become more unequal over time. The wealth holdings of the richest 0.5% of families grew by one percentage point over the entire 21-year period, 1962-83, but grew by four times as much in just six years between 1983 and 1989. Meanwhile, the bottom 60% of families had lower wealth holdings in 1989 than 1983.
 
“The trends revealed a middle class that was losing ground. Median family incomes for 1990 and 1991 dropped to their levels of the late 1970s when adjusted for taxes and inflation. But even more alarming was the fact that these trends translated into greater poverty and hunger among the more vulnerable sectors of the population.
 
“The percentage of whites living in poverty rose from 9 per cent in 1979 to 10 per cent in 1989. In the case of Hispanics, the increase was from 22 to 26 per cent, while black poverty remained steady at 31 per cent. While the ratio of black to white incomes did not change much, with black median income remaining at 60 per cent that of whites, the ratio of Hispanic to white median income fell from 69 per cent in 1979 to 65 per cent in 1989. Despite the differences in racial impact, it is clear that the most prominent feature in the Reagan rollback was its class character.
 
“That their circumstances had not declined further with respect to whites according to some social indicators was, of course, cold comfort for blacks, for the inequalities that remained the same or became only slightly more pronounced are nevertheless stark: average black per capita income is now less than 60 per cent that of whites; 13 per cent of blacks are jobless compared with 6 per cent for whites; and the life expectancy of black males is seven years less than that of white males.
 
“By the end of the Republican era, the United States, a congressional study asserted, had become ‘the most unequal of modern nations.’ Some 20 million Americans were said to be experiencing hunger; 25 million of them - some one in every 10 - were receiving federal food stamps. The child poverty rate, which had risen from 18 per cent in 1980 to 22 percent in 1991, was the highest among the industrialized countries. Among children in minority groups, the poverty rate was even higher, at almost 50 per cent.
 
“Indeed, structural adjustment Republican-style was beginning to give the US a Third World appearance: rising poverty, widespread homelessness, greater inequality, social polarization. But perhaps it was the condition of infants that most starkly captured the ‘Third Worldization’ of America. The infant mortality rate for African Americans now stands at 17.7 infant deaths per 1,000 live births. This figure compares unfavorably not only to those for most other industrial countries but even to figures for some of the developing countries of the Caribbean, such as Jamaica (17.2 per 1,000), Trinidad (16.3), and Cuba (16).”[32]
 
Despite being the world’s richest country, the U.S. has a poverty level twice that of any other industrial society, which is particularly devastating for American children. By 1990, 30 million people suffered from hunger, an increase of 50 per cent from 1985. This included 12 million children lacking sufficient food to maintain growth and development - and this was before the 1991 recession. In the world’s richest city - New York - 40 per cent of children fell below the poverty line. By 1995, almost one in four children under six throughout the country were living in poverty.[33] An estimated 40 million people in the U.S., by the same year, were living at or below the poverty line - a rise of 10 million since 1990.[34]
           
The United Kingdom, following the footsteps of the United States, has undergone a similar increase in impoverishment. “One in three British babies are born in poverty”, the British press reports, while “child poverty has increased as much as three-fold since Margaret Thatcher was elected”. The result is that “up to 2 million British children are suffering ill-health and stunted growth because of malnutrition”, while one-third of all British children - 4 million - are now living in poverty.[35] According to recent UN reports 15 per cent of the British population in general - fourteen million people - live in poverty and the gap between the richest and poorest is wider than that in Sri Lanka and Ethiopia. The number of impoverished in Britain therefore constitute nearly a fifth of the population. The UK also suffers from problems of deprivation, chronic unemployment, and poor literacy levels. Additionally, many people suffer from a lack of access to services, poor health, bad housing and unemployment.[36] In 1999, one-fifth of British households of working age had no one to work in them. This had actually doubled since 1979.[37] Similarly doubling since 1979 is the number of British adults living in poverty - now a quarter of the adult population.[38]
 
Thus, just as in the U.S., poverty in Britain has been steadily rising. In 1968, 10 per cent of British children lived in poverty. By 1979 this rose to 12.6 per cent. By 1996, this became 36 per cent: one-third of British children.[39] Similarly, according to the Wall Street Journal, the number of full-time British employees with weekly pay below the Council of Europe’s ‘decency threshold’ had risen from 28.3 per cent in 1979 to 37 per cent in 1994.[40] Labour Prime Minister Tony Blair has done little that will genuinely reverse these problems, the most important causes of which lie in factors he has refused to address, e.g. the dramatic fall of incomes. Between 1979 and 1992-3, the poorest tenth of the British population were subject to a reduction of 18 per cent in their real income after housing costs. This should be compared to the rise of 61 per cent for the top tenth.[41] Economic Trends reports that post-war improvement for the poor “has been put into reverse [since 1979]. Income has not trickled down but filtered up from the poorer sections of society to the richer ones.”[42] In this connection it is worth noting the comments of then British MP Tony Benn in March 2000, who was one of the oldest members of the Labour. Benn, a long time Labour loyalist, criticised the government’s policies on BBC2’s Newsnight, pointing out that all recent reforms were, like the previous Conservative government’s, designed in such a way that they would hit the poor and lower-income earners hardest. He noted that effectively the interests of the wealthy minority are being protected by government policies, unlike the needs and interests of other less privileged sectors of the population. He characterised the situation as one in which the rich were “ring-fenced”, their interests protected by government policies unlike the interests of the rest of the population.[43]
 
The reality, therefore, is that ‘economic growth’ does not largely accrue to the general population, but is essentially a symptom of corporate welfare, i.e. it entails only the maximisation of corporate profits, at the expense of everyone else. Reporting on the booming growth of the U.S. economy, the Washington-based network of academics, journalists and other media commentators, the Institute for Public Accuracy (IPA), observed that:
 
“While the Commerce Department has just reported that the economy grew at an annual rate of 6.1 percent during the final quarter of 1998, independent economists cautioned that - despite a hefty boost in the U.S. gross domestic product - huge gaps exist in Americans’ economic well-being.”
 
American economist Robert Ginsburg, Research Director of the Chicago-based Midwest Center for Labor Research noted of the underlying realities of the so-called U.S. boom that:
 
“All growth is not equal... The current economic expansion has a dark side. In the past five years, nearly 50 percent of the jobs created paid less than the federal poverty level for a family of four. According to the Bureau of Labor Statistics, only two-thirds of the people laid off in the last few years in the recurring waves of downsizing are back in full-time jobs. Of those lucky enough to get full-time jobs, nearly half earn less than they did before. This is why the income gap is increasing. That is why real wages have not risen above the level in the late ‘70s and that is why the number of poor and homeless in this country continues to grow.”[44]
 
Britain under Blair is facing similar problems. The decrease in unemployment does not represent a decrease in poverty levels. Conversely, the rise in employment, as with the U.S., does not logically implicate that people are earning enough to rise above poverty. Questions are never asked about the kind of jobs the new employed are doing, the level of their incomes, and the relation of this to fulfilling the necessities of life.[45]           
 
Despite the domestic condition of millions of people, the prime focus of spending continues to be not the public, but defence contractors and other members of the corporate elite. Greg Speeter, Executive Director of the U.S.-based National Priorities Project, commented on President Clinton’s 1999 budget for the richest country in the world:
 
“The fact that we’re looking at increasing the Pentagon budget by $110 billion over the next five years, at a time when it ought to be going down, is ridiculous. Our domestic needs are increasing. We have a child poverty rate of 20.8 percent according to the Census Bureau. Drinking water systems that serve more than 50 million Americans violate health regulations and standards. The GAO says that 30 percent of our schools are in need of extensive repairs. Over 40 million Americans have no health insurance. We have a shortfall of 5 million low-income housing units. Forty-six percent of the jobs with the most growth, like cashiers and waitresses, pay less than half a livable wage.”
 
So who in particular was to be in receipt of U.S. government spending? Mark Zepazaur, author of Take The Rich Off Welfare, answered this question bluntly:
 
“We’re doling out hundreds of billions of dollars every year to huge corporations and wealthy individuals. The Overseas Private Investment Corporation finances multinational corporations’ risky investments abroad, where the taxpayer guarantees their dealings, so they get a bailout if things don’t go well for them in the big bad free market. The Agriculture Department is ponying up money for McDonald’s and Pillsbury to advertise their products overseas. Other major beneficiaries of the budget include the timber, ranching, mining and nuclear power industries.”
 
As for the arms industry, “The military contractors are desperate for more money to keep their profits soaring far into the next century - that’s why we have these scares about the supposed inferiority of U.S. weapons”, observes Marilyn Clement, Executive Director of the Woman’s International League for Peace and Freedom. “We don’t need new attack submarines costing $13 billion; the same amount would provide health insurance for the 11 million uninsured kids in America. Thirty-nine new F-22 fighter planes costing $7 billion would allow 1.7 million children to benefit from Head Start.” U.S. political analyst William Hartung, a Senior Fellow at the World Policy Institute, pointed out that this “increase” in spending “on military procurement” “is not a response to threats in the world, it’s a response to perceived political threats to Clinton and Gore.”[46]
 
Of course, as British economist Paul Ekins points out, people in poverty in Western countries may not actually be starving, although no doubt many of them are. Most of them are relatively poor. The great majority of impoverished of the Third World live in absolute poverty, which is a tangible physical condition. However, relative poverty, which is more widespread in the West, is less a tangible physical condition, “than a function of expectations and opportunity in a particular society”, involving alienation, isolation and despair (although, of course, material conditions are still a significant dimension of relative poverty). These “psychological aspects of relative poverty mean that it can be as harrowing as the absolute variety”, albeit in different ways. For instance, relative poverty can result in drug use, as well as the resort to violence and crime. It can play a pivotal role in “breaking up families, destroying a person’s sociability and confidence”, while causing intense personal stress.[47] Time magazine reports, for instance, that in the U.S. about one-quarter of the millions who live below the poverty line are “caught in a vicious circle of poverty and despair”. Living in the “decayed hearts of major cities”, they are “prisoners of ghetto pathology”, “the denizens of a self perpetuating culture” scarred by teenage pregnancy, fatherless households, chronic unemployment, crime and drug use.[48]
 
In fact, within the Western countries, social, political and economic conditions have led to a rise in all kinds of psychological disorders and illnesses. The evident failures of domestic social structures appear to be conditioning individuals into a state of psychological neurosis. According to the annual report of Liverpool’s Department of Public Health (1996), one in three children living in inner cities suffer from “moderate to severe mental health problems.”[49] June McKerrow, Director of The Mental Health Foundation, reports: “Mental illness affects 1 in 4 of the UK adult population at any point in time and kills four times as many as road accidents. It is as prevalent as heart trouble and three times more common that cancer.”[50] Spokesman for the British Medical Association Dr. Ian Banks also pointed out that suicide is “the big new killer of  men and is shockingly popular - it has doubled in the last ten years. The one clear cause is uncertainty at work. Short-term contracts are a constant strain that makes men ill.”[51] According to the BBC, the findings of a business information group Gee Publishing show that:
 
“Stress is now the number one reason behind sickness from work… One third of employers are now providing stress counselling for employees because they are increasingly worried about the impact the problem will have on their business… Gee Publishing’s human resources manager, Sally Harper, said: ‘Growing evidence of the impact of stress on absence levels, coupled with recent legal awards against companies, seems to have made this problem too big to ignore’.”[52]
 
As former British business executive David Edwards further observes:
 
“Similar figures for Sweden show that two out of three Swedish women and half of Swedish men visit a psychiatrist for help at some time in their lives - figures which are extraordinary given the general taboo against seeking such help (we can only speculate on the numbers of people who feel in need of such help but do not act on their despair). Figures from the United States, where 10 per cent of all women are either anorexic or bulimic (with the figure as high as 20 per cent among the female student population), add to the impression that it would be more appropriate to talk in terms of the percentage of people not suffering from some form of mental ill health.”[53]
 
Muslim economist Umer Chapra similarly notes “a rising level of stress, tension and strife in human affairs, accompanied by an increase in all the symptoms of anomie, such as frustration, crime, alcoholism, drug addiction, child battering, mental illness and suicide, all indicating lack of inner contentment in the life of individuals.” He also point out there has been a “rise in all the symptoms of anomie”, indicating a “lack of inner happiness in the life of individ