Edited/Distributed by HURINet - The Human Rights Information Network
Globalization: The Third Wave
by Roberto Verzola - Part 1
(Part 2)
[Roberto Verzola is the coordinator of Interdoc, a loose international
network of non-government organizations (NGOs) which is tracking the
impact of the emerging global information economy on developing countries
and on social movements. He is also the secretary-general of the
Philippine Greens, a political formation dedicated towards building
self-sufficient communities guided by the principles of ecology, social
justice and self-determination. He makes a living operating an electronic
mail service for NGOs, and is an electrical engineer by training. This
paper will be presented at the international conference "Colonialism To
Globalization: Five Centuries After Vasco da Gama", sponsored by the
Indian Social Institute (ISI) on February 2-7, 1998, in New Delhi, India.]
Our common colonial experience
We are all familiar with colonialism. The dates may
have varied; the colonizing country may have been
different; but the main features of our common colonial
experience were basically the same:
- Using superior military technology, the colonizing
power forcibly imposed its rule over our peoples, at
great cost to us in terms of human lives and suffering
and in terms of human and natural ecology.
- Military conquest was very often preceded -- and most
certainly followed -- by the imposition of new
religions and cultures, which facilitated subjugation
by dulling the impulse to resist or diluting the desire
to free ourselves from colonial clutches. The effects
of such cultural implantation on our minds have
lingered and continued to do their damage, keeping us
in mental bondage long after the last colonizing
soldier has left our soil. Soon, the colonial mind
started to take for real the masks worn by the
colonizers and the words they used to deceive their
victims, such as "we bring you Christianity"; "we bring
you civilization"; "we will teach you democracy"; etc.
- As soon as resistance was quelled, the colonizing
power set up a colonial administration, run at lower
levels by people culled from local elites, many of whom
decided to work hand-in-hand with their colonial
masters to preserve their wealth and privileges.
- As the colonial bureaucracy was put in place, the
process of drawing out our wealth then began. Over the
centuries, the colonizing powers enriched themselves
immeasurably by drawing human and natural resources
from our lands -- human slaves, indentured labor,
tributes, precious metals and other minerals, logs and
lumber, colonial crops cultivated on seized indigenous
lands, and so on. At the very foundations of the
richest countries of today, are the broken remains of
our own ancestors and the wealth plundered from their
communities.
- The colonizers brought with them the practices of
plantation agriculture, large-scale logging,
large-scale mining, and other unsustainable
technologies, which were meant for plunder and for
maximizing exploitation and profits. These
unsustainable practices replaced the sustainable
indigenous practices our pre-colonial peoples had
relied on for centuries.
- The impact on the people and their communities was
grievous. We lost our right to self-determination and
our freedoms. We lost our wealth through colonial
plunder. Our best lands were seized for colonial
tillage. Indigenous communities lost their rights to
their lands. The impact on nature was equally
disastrous. Colonial occupation was invariably marked
with plunder of our natural resources and the
introduction of monoculture in direct contrast to the
much more sustainable and ecological practices of our
pre-colonial past.
- During this period, the colonial powers that took
over the globe were mercantilist and, later, early
industrial powers. Often operating their own State
monopoly corporations, they scoured the globe in search
of slaves, tradeable goods or raw materials, and bases
for their colonial operations.
This period of colonialism may be called the first wave
of globalization.
A range of anti-colonial responses
The independence struggles waged by our peoples in
response to this wave of globalization are also
familiar to all students of history. Many of these
independence struggles were eventually resolved through
successful armed revolutions. We in the Philippines,
for instance, commemorated in 1996 the centennial of
our own revolution against Spain -- one of the first of
the national independence movements that eventually
emerged in this part of the globe.
In other countries, a peaceful withdrawal of occupation
forces and turnover of formal political power to the
local elites was effected, very often retaining the
same colonial set of laws, bureaucracy and armed forces
that had served the foreign masters. Again recalling
our own experience, the newly-born Philippine republic
that emerged out of our 1896 revolution was aborted,
and our painful colonial experience extended for
another half a century, as the United States (U.S.)
used superior military power to wage a genocidal war
against the newly-independent Filipinos, imposing an
equally plunderous colonial regime on our lands and
peoples. In 1946, the Americans peacefully turned over
formal political rule to the local elites, after first
making sure that the 'newly-independent' Republic of
the Philippines was bound by economic and military
treaties that belied claims of genuine sovereignty.
Where independence was won by arms -- in China, for
example -- the colonial economic and political
interests had to beat a full retreat. They lost their
territorial rights and their businesses, their
properties confiscated and nationalized. Where
independence was 'granted' to a local elite which had
been trained by their colonial masters, the latter
still had to put up with some nationalist efforts by
locals to regain control of their economy. These took
the form of foreign ownership limits, profit
remittances restrictions, local content requirements,
export quotas, and other attempts to regulate foreign
businesses. In the Philippines, for instance,
foreigners were allowed a maximum of 40% ownership in
corporations, and were excluded from specific areas
like media and communications, natural resources
exploitation, the professions, and retail trade. The
latter restriction, by the way, exempted Americans by
virtue of a post-war agreement the Philippines was
forced to enter into, under threat by the U.S. to
withhold any post-war aid if several treaties it wanted
were not ratified.
The corporate counter-response
During this post-colonial period, the role of global
capital expanded, partly due to internal developments
in their home countries, and partly as a
counter-response to independence movements and economic
nationalism. Having lost direct control over their
colonies, global capital sought and became better at
indirect control; military aggression was replaced by
culture-aggression and economic control. By this time,
internal developments within the colonizing powers
themselves had prepared their economies for this shift:
many of them had reached the late industrial stage of
development. Huge private corporations in partnership
with governments had accumulated vast amounts of
financial wealth, turning money itself into a major
commodity. These corporations needed new markets and
investment areas, rather than colonial territories that
were becoming more and more difficult and costly to
retain politically and militarily.
We are also familiar with these post-colonial
developments.
- Again, they masked their real intention of drawing
wealth from our lands and communities with such
pretexts as: "we bring jobs"; "we bring technology";
"we will lend you money for development"; "we will
protect you from communism"; and so on.
- Instead of relying on military conquest, these global
corporations worked closely with elite- led
governments, particularly those local classes whose
economic interests coincided closely with their former
masters. Often, the local police and armed forces were
flooded with aid, to win their loyalty and service.
- The post-colonial bottom line was no different: the
extraction of wealth. This occurred through: unequal
trade (depressed prices for our agricultural
commodities, monopolistic prices for their industrial
manufactures); high interest rates on foreign loans;
using loan conditionalities to exact further
concessions; quick and massive profit repatriation; and
low wages. By retaining post-colonial dominance and
control in the economic and cultural spheres,
post-colonial wealth extraction could proceed unabated.
- Chemical agriculture was introduced to intensify the
production of export crops, causing widespread
poisoning and damage in the countryside. Exploitation
of our natural resources intensified, and energy
generation projects such as huge dams, coal and oil
plants, and nuclear plants in some cases ravaged the
countryside.
- The development of a natiowide mass media
infrastructure served to further strengthen the
colonial hold on local minds, to create and expand
markets, and to ensure a friendly environment for
foreign investments and foreign products.
The second wave of globalization
This post-colonial wave may be called the second wave
of globalization, where industrial countries and global
corporations would range across the globe for
investment areas, industrial markets, trading partners,
and sources of cheap labor and raw materials.
This wave has gone through several phases, reflecting
the progress of an unequal contest between powerful
countries strengthened by the immense wealth they had
drawn from colonial victims on the one hand, and the
newly-independent nations weakened by centuries of
plunder and exploitation on the other hand.
The early-independence phase was often marked by
intense economic nationalism, as local economic
interests tried to mobilize their government to enhance
their economic sovereignty while global corporate
interests fought to retain their colonial
privileges.This phase saw the adoption of economic
protectionist measures meant to strengthen local
capital vis-a-vis foreign capital.
The second phase saw a succession of crises that
included the oil shocks of the 70's, the debt crises of
the 80's, the socialist crisis of the early 90's, and
the financial crisis of the late 90's, which is still
going on. Socialism had earlier provided a
counter-balance to global corporations and their
governments, as well as a possible alternative path for
independence movements. These crises weakened the
capacity, the will, and the overall position of the
former colonies and enabled global corporations to
launch major counterattacks in order to regain much of
the colonial power and privileges they had lost during
the economic-nationalist phase.
The post-colonial counterattacks by global corporations
mark the third phase of this second wave. Many
countries, despite having freed themselves from
centuries of colonial rule, then lost much of their
economic sovereignty to corporate-controlled
international institutions such as the International
Monetary Fund (IMF), the World Bank (WB) and the World
Trade Organization (WTO). Through loan
conditionalities, structural adjustment programs, and
other means, many nationalist laws and provisions
gained by earlier anti-colonial independence movements
were undermined and dismantled. Some authors --
Chakravarty Raghavan, for example -- have called this
phase a process of "recolonization", a return of
colonial privileges for global corporations.
The impacts of this wave of globalization are no less
destructive than the colonialism that preceded it. Our
agricultural products consistently suffer from low
prices; our workers from low wages. We are losing much
of our capital due to profit repatriation and the debt
crisis; chemical farming is taking away our food
security and putting it in the hands of global chemical
and seed conglomerates. We enjoy national sovereignty
in name only. We are suffering from widespread
ecological disasters, triggered by intensive resource
extraction, disruptive energy projects, and toxic
pollution. Our forests, mines and quarries are being
quickly depleted; our air, water and soil heavily
contaminated; and pervasive monoculture is seriously
threatening our biodiversity.
This part of our history and current events should also
be familiar to most of us.
Alert: the third wave is coming
We are still in the midst of the second wave of
globalizaation, yet a third one has already emerged.
The third wave of globalization began to be felt
worldwide in the last half of the 1990's and will
probably express its overwhelming presence in full
force at the dawn of the 21st century. This looming
third wave is the global information economy.
Like the first two waves, the third globalization wave
arose from internal developments within the hearts of
the global powers. It is important to look at these
internal developments, because they will, as in the
past, eventually impinge on the rest of the world --
including our own -- often shaping our destinies and
steering our development in directions we never wanted
to take.
The colonial powers were mercantilist and, later,
industrial countries in their early expansionist
stages. The post-colonial powers were industrial
countries in their late stages, when capitalism had
developed further, combining industrial and finance
capital into huge monopolistic conglomerates in
continual search for new acquisitions, sources of cheap
raw materials and labor, and markets. The third wave of
globalization is marked by the emergence and eventual
dominance, within the most advanced industrial
countries, of the information sector -- the sector that
produces, manipulates, processes, distributes and
markets information products.
There is enough literature that describes the dominance
of the information sector in the U.S. One of the
earliest is a landmark study by Marc Porat, who
analyzed some 201 industries in the United States in
1967. Here's an account of Porat's study (Megatrends by
John Naisbitt, 1982):
"Porat sorted through some 440 occupations in 201
industries, identified the information jobs, and
compiled their contribution to the GNP.
Questionable jobs were excluded so that the
study's conclusions err on the conservative side.
"Porat's study is incredibly detailed. He begins
with the obvious sorting-out and tallying-up of
the economic value of easily identifiable
information jobs such as clerks, librarians,
systems analysts, calling this first group the
Primary Information Sector. According to Porat's
calculations for the year 1967, 25.1 percent of
the U.S. GNP was produced in the Primary
Information Sector, that is, the part of the
economy that produces, processes, and distributes
information goods and services. Included here are
computer manufacturing, telecommunications,
printing, mass media, advertising, accounting and
education, as well as risk-management industries,
including parts of the finance and insurance
businesses.
"But Porat's study goes on to deal with the more
difficult questions that have overwhelmed other
researchers. How does one categorize those
individuals holding information jobs with
manufacturers and other noninformation firms? To
answer this question required 'tearing firms apart
in an accounting sense into information and
non-information parts.'
"Porat creates a new information grouping called
the Secondary Information Sector. It quantifies
the economic contribution of information workers
employed in noninformation firms.
"These workers produce information goods and
services for internal consumption within
goods-producing and ohter companies. In effect
their information products are sold on a
fictitious account to the goods-producing side of
the company. The Secondary Information Sector
generated an additional 21.1 percent of the GNP.
"Porat's study concludes, then, that the
information economy accounted for some 46 percent
of the GNP and more than 53 percent of the income
earned. This was in 1967."
This was also before the widespread use of satellite
communications, fax machines, cell phones, cable
television, personal computers and, of course, the
Internet. Today, there is no doubt that the information
sector is the dominant sector of the U.S. economy,
making the U.S. the leading information economy in the
world.
A global information economy
The increasing dominance of the information sector in
what had been industrial economies is turning them into
information economies. These emerging information
economies -- principally the U.S. and to a lesser
extent some countries of Europe -- are at the core of
the third wave of globalization. Because of the way
these economies are so closely interconnected, they are
better seen as a single emerging global information
economy. The Internet is perhaps the most visible
portion of this economy -- and certainly the one which
has received the most media attention. This emerging
global information economy includes the global
infrastructure for telecommunications, data exchange,
media and entertainment; the knowledge industries; the
publishing industries; the computer hardware and
software industries; the emerging financial systems
that will support online transactions; the emerging
global legal infrastructure based on the WTO, including
the GATT and the agreements in information technology,
telecommunications and financial services; and the
biotechnology and genetic engineering industries.
Unlike the first two waves, the implications and
consequences of the global information economy are an
unfamiliar phenomenon to most of us. There are so many
new things, so many new possibilities, that it is quite
difficult to separate the chaff from the grain, the
hype from the substance.
This is what this final portion of my paper will try to
do.
Information: a closer look
Let us look closely at the archetypal information
product: information stored in a magnetic medium. It
can be software on a diskette, databases on hard disks,
an audio casette, or a video casette. Remember that the
product is not the medium but the message; it is
neither the disk nor the tape, but their contents. The
same medium with a different message is a different
product; the same message on a different medium is the
same product. Other forms of information, like books
and other printed publication, live audio and video
information, drawings and designs, and genetic
information may now be easily transformed into their
archetypal equivalent.
The distinctive feature of an information product is
that it can be copied at little cost. The cost of
copying books is still on the high side, but the cost
of copying electronic data is nearly zero. Furthermore,
we can give copies away without losing our own copy.
This is true of software, databases, songs, videos,
designs, and most other information goods -- including
genetic information.
In short, the cost of reproducing information -- what
the economist calls its marginal cost -- is very low
and oftentimes approaches zero.
In the last analysis, this feature is due to the very
essence of information itself. Information is
non-material in its essence -- a numeric measure of the
uncertainty which it resolves. The non-materiality of
information is the basis of its low reproduction cost,
which may be driven lower and lower by adopting
representations that can be manipulated at lower cost.
With today's digital representations, the costs of
reproducing and distributing information have reached
historic lows -- as low as the cost of copying a
diskette or downloading a file from an online server.
Low marginal cost leads to sharing
The low marginal cost of information has two major
implications: one for those who use it, and another for
those who sell it.
For users, it encourages sharing. Many cultures, in
fact, see knowledge as social wealth -- a collective
asset that is meant to be shared. These cultures --
including most Third World and indigenous cultures --
are therefore in close harmony with the very nature of
information. When we share software, for example, we
are only being true to the nature of information and to
our own cultures.
But there are other cultures, where private property
concepts have become more absolute and where almost
everything may be commodified. In these cultures --
often with capitalism at their core -- information has
become an object of commodification and privatization.
Culture itself has become commodified, together with
knowledge and life. They have become vehicles for
profit-making.
Profit-making mechanism: the monopoly
Let us look more closely at the mechanism of
profit-making through information. First, the seller
turns information from a collective asset into private
property. Then, copies are sold on the market, at
prices set by the "owner"/seller. The near-zero
marginal cost of reproducing information now makes its
selling price nearly pure profit. A diskette of
software that may be copied for cents is sold for fifty
dollars. A CDROM that may be reproduced for three
dollars is sold for three hundred.
To realize these extremely high profit margins made
possible by the low marginal cost of information
products, however, the seller must create an artifical
scarcity of the product. We have seen that information
can now be easily copied by users themselves at
practically no cost, creating a natural abundance which
drives prices down. To keep prices and profit margins
high, this natural abundance that proceeds from the
essence of information itself must be prevented. The
seller does it by essentially prohibiting sharing among
users and acquiring from the State a monopoly in using
and making copies of the information product. This
creates the artificial scarcity that drives prices up
and realizes for the seller the potential profits from
high margins.
It is monopoly that creates the scarcity. Such
monopolies are euphemistically known as "intellectual
property rights (IPR), the main form of ownership in an
information economy. They are the mechanism for
maintaining the high profit margins of those who
control and sell information products. IPRs have two
major forms: copyrights (historically, limited
monopolies covering literary materials), and patents
(historically, limited monopolies covering inventions).
In recent years, as the information sector gained
dominance and the propertied classes of this sector
increased their political and economic power, IPRs have
been strengthened and extended to new areas.
IPRs are, in reality, statutory monopolies. They are
monopolies over information granted through statutes,
by the State. Those who control information through IPR
are basically rentiers: they make money by charging
monopoly rents from users, who are threatened by State
action should they continue to practice information
sharing. In the Philippines, monopolies represented by
the Business Software Alliance (BSA), in collaboration
with the Philippine government, have actually raided
educational institutions and commercial shops to
enforce their information monopolies.
Conflicts within the information economy
Still, enforcing information monopolies is not simple.
After all, information monopolies are incompatible with
the social nature of information. The deeply-ingrained
cultural habits of information sharing and exchange
continue to assert themselves, regardless of the will
of monopolists and their State protectors.
This is the dilemma within the emerging global
information economy.
On the one hand, information itself is a highly social
good; on the other hand, the forms of ownership are
highly monopolistic. On the one hand, users tend to
share information goods; on the other hand, IPR holders
insist on their monopolies. On the one hand, developing
countries need the widest access to various technology
options at the least cost; on the other hand, rich and
powerful information economies control almost 90% of
all the IPRs in the world today, and want to increase
their control further.
The basic conflict within the information sector is the
incompatibility between the highly monopolistic forms
of information ownership and the social nature of
information. This conflict is also expressed between
users who want to share information freely and monopoly
claimants who want to prevent free sharing of
information. It is further reflected in the conflict
between developing countries who need low-cost access
to major bodies of information and information
economies which have established virtual monopolies
over information. Historically, these information
economies are basically the same colonial powers that
have exploited developing countries over the centuries.
The socializing tendency emanates from the nature of
information itself, and can therefore never be
suppressed. The monopolizing tendency emanates from the
potentially high profit margins in selling information
and the economic and political power concentrated in
information monopolies. The conflicts arising from
these two opposing tendencies will drive the historical
development of the third wave of globalization.
Continued - Part 2