Edited/Distributed by HURINet - The Human Rights Information Network Globalization: The Third Wave by Roberto Verzola - Part 2 (Part 1) Internal engine Within the U.S., the high profit margins in the information sector is attracting more investment capital towards this sector, away from the agricultural and industrial sectors. This is the internal engine that is slowly transforming the U.S. economy into an information economy. Within the emerging global information economy itself, monopoly concepts are already well-established and are even expanding their coverage. One item, for instance, is always non-negotiable in the U.S. diplomatic agenda: intellectual property rights (IPR). These concepts are increasingly dominating international legal systems through bilateral negotiations with the U.S. and through the World Trade Organization (WTO). Thus, worldwide, pressure is increasing on countries with non-monopolistic attitudes towards information to adopt the same U.S. legal system that strictly protects IPRs. However, the social nature of information continually asserts itself. Information abundance created through user sharing and exchange keeps breaking through the artificial scarcity created by information monopolies. The latest releases of popular software, songs or video immediately find themselves being copied in every corner of the globe. In effect, information automatically globalizes itself regardless of the will of those who insist in monopolizing them. Ironically, information monopolists find their products better distributed in those parts of the globe where they could not enforce their monopoly. They therefore insist on imposing monopolistic legal systems upon the rest of the globe, so they can realize the same profit margins they enjoy in their monopoly areas. Even one country that refuses to be part of this global legal system will pose a threat to their global monopoly, thus they will exert every effort to bring it in. These monopolists will never leave any country -- or any community -- alone. They are the real engines of globalization's third wave. This is also what makes the information sector qualitatively different from the industrial and agricultural sectors. It justifies why the emergence of the global information economy must be considered a distinct wave in itself, instead of simply a part of the second wave of globalization. Cyberlords Information monopolies may be established not only by staking monopoly claims over information content through IPR, but also by controlling the hardware infrastructure for manipulating or distributing information. This infrastructure includes computer centers, voice and data switching centers, communication lines, television and radio stations, satellite networks, cable networks, cellular networks, printing presses, moviehouses, etc. Like their software counterparts, the owners of the hardware infrastructure make money through monopoly rents, in the form of subscription fees or per-use charges. Because they earn their incomes from monopoly rents, the propertied classes of the information sectors are rentier classes. They are the landlords of cyberspace, or cyberlords. The content monopolies are owned by information cyberlords, and the infrastructure monopolies are owned by industrial cyberlords. The richest man in the world, as well as several others among the ten richest, is a cyberlord. The economic powers of cyberlords are immense, and these powers are increasingly being felt in the political and diplomatic arena. Among U.S. negotiators, for instance, IPR -- the mechanism which gives software cyberlords their power -- is invariably a non-negotiable item in their agenda. It is the partnership between information cyberlords, industrial cyberlords, and finance capitalists which is the at the core of the third wave of globalization. To sum up: an information economy is one whose information sector has become the main source of wealth, eclipsing its industrial and agricultural sectors. The products of industrial and agricultural economies are material goods; the products of an information economy, however, are non-material goods. The reproduction cost of information goods is very low. This has led to the widespread social practice of freely sharing and exchanging information. On the other hand, it also promises extremely high profit margins, if the seller can monopolize information. Information monopolies have become the main form of ownership in the information sector. The high profit margins that they realize have led to a continuous movement of investment capital towards the information sector, eventually making it the dominant sector of the economy and transforming the economy into an information economy. The products of this information economy spread worldwide, as people freely share and exchange information goods. Thus an information economy needs a global system for enforcing its monopolies as well as for gathering information materials, tapping intellectuals and of course collecting payments worldwide. This leads to the globalization of the information economy and is the engine of the third wave of globalization. The main propertied classes within the information economy are information cyberlords, who control information content, industrial cyberlords, who control information infrastructures, and finance capitalists, who control investment funds. First to third waves: a comparison Let us compare the emergence of the global information economy with the two previous waves of globalization: - The first wave was after slaves, previous metals and lands for raising export crops; the second wave was after new investment acquisitions, sources of raw materials and labor, and industrial markets. The third wave is after sources of mental labor, sources of information raw materials, and markets for information products. This is why the WTO pushed very hard to conclude as soon as possible the agreements on information technology, telecommunications and financial services. - The third wave requires freer movement of information across national boundaries. This has helped erode further the power of the State. While the State itself operated corporate monopolies during the first wave, and continued to be dominant over corporations during the second wave, it is finding itself less powerful during the third wave. Global corporations are now assuming the dominant role in the State-corporate partnership, in close collaboration with supra-national institutions like the International Monetary Fund (IMF), the World Bank (WB) and the WTO. - As in the first two waves, the extraction of wealth from the rest of the world is likewise done under a mask that hides real intentions. The third wave hides behind such phrases as "information at your finger tips", "world without borders", "global village", instant access to the world's libraries", "free flow of information", or "TV with a million channels." - In reality, the global information economy imposes its own global rule to facilitate the wealth transfer. The role of the nation-state shrinks, many of its functions taken over by private corporation. National sovereignty is curtailed by supra-national institutions. Global corporations continue to strengthen their political voice and clout, and directly enter into partnerships with local elites and local governments, often bypassing the host government as well as their own government. Corporate control of information, communications, and media infrastructures is strengthened through privatization and deregulation. - In addition to the earlier forms of wealth extraction practised during the first and second waves, new forms emerge or old forms acquire new importance. Monopoly rents become the main form of wealth extraction. Because of the huge disparity in costs, trade between information economies and other economies become even more unequal. Compare, for instance, a CDROM which might sell for three hundred dollars, but whose production cost is around three dollars, to a typical Philippine product like sugar, which might sell for fifteen cents per pound. Much of the three hundred dollars in the price of 2,000 pounds of sugar would barely cover the cost of production, while much of the three hundred dollars in the price of a CDROM would be profit. Royalties from intellectual property rights (IPRs) and other income from information rents assume major significance; technology makes possible high-speed, finely-tuned financial speculation. As the importance of the nation-state recedes, corporations are able to purchase State assets and public properties at bargain prices. - New technologies of exploitation are introduced. First wave technologies were designed for the immediate plunder of our natural resources and human communities. Second wave technologies were based on material exploitation and intensive energy utilization. Third wave technologies are invariably information-based, centered on extracting the highest monopoly rents from the control of information infrastructure or information content. The best example of a technology that is at the leading edge of the third wave of globalization is the Internet. Advanced information and communications technologies make possible the convergence of media, entertainment, data, and communications. The application of information technology to genetic engineering and biotechnologies has transformed these fields and made them fertile areas for information monopolies, best illustrated by the patenting of life forms. - We are already starting to feel the impact of the third wave. Strengthening information monopoly mechanisms will increase the cost and make more difficult access to new technologies. As the global information infrastructure now being constructed reach the remotest corners of our countries, we will be further flooded with all kinds of junk culture, easily accessible with a few keystrokes, and the homogeneization of our cultures will reach new levels. The reckless experimentation with new life forms in the race to introduce new commercial biotechnology products and services will lead to biological pollution from genetically-modified organisms. Their potential for damage will be infinitely greater than chemical pollutants because these organisms can reproduce by themselves, mutate and evolve. Driven by the logic of profit-making and rent-seeking, biotechnology will pose the greatest threat to human health and survival. Super-exploitation The global information economy will also enable those with vast resources to concentrate wealth further into their hands. To illustrate this capacity for super-exploitation unleashed by third wave technologies: imagine a corporation which can afford to automate its international financial transactions so that its computers could do a round-the-clock, unattended scan of the global financial markets for opportunities, make decisions automatically, and conclude a financial transaction within three seconds or a buy-then-sell transaction pair within six seconds. Such a facility, backed up by vast financial resources, executing financial transactions and profitting from them every 6 seconds, 24 hours a day, 365 days a year, would be able to double its owners' investment funds, based on the following table: Profit Margin for every Period it takes for buy-then-sell transaction investment to double 1% 7 minutes 0.1% 69 minutes 0.01% 11.6 hours 0.001% 4.8 days 0.0001% 1.6 months 0.00001% 1.3 years Who but the largest financial conglomerates would have the resources to set up and maintain such automated, round-the-clock facilities with a global reach? We had better think again, those among us who believe that the Third World can leap-frog second wave economies and ride the third wave by surfing the Web or by selling our agricultural and manufacturing commodities and our cheaper labor over the Internet. What we face here is really a new personification of greed, one that has freed itself of distracting human feelings like love, compassion, charity, guild, fear and other emotions, leaving only pure greed, unencumbered and free to pursue singlemindedly the one and only thing that motivates it: profit. It is the search for profit by global corporations that is powering the whole process. These corporations have even acquired their own rights, which are often more favorably recognized than the rights of real persons. They have learned to nourish themselves and to grow by feeding on nature, people, and information. They have become increasingly aggressive in asserting their freedoms ("liberalization"), overcoming government controls ("deregulation") and in taking over government activities ("privatization"). Corporations had earlier shared global rule with governments. Now, they want to rule it by themselves ("globalization"). The colonization of our countries that began in the 16th century hasn't really stopped. It has just changed forms, coming in waves of globalization that intrude into our communities, impose their unwanted rule, and squeeze the wealth out of our people and environment. With each improvement in technology, with each transformation of capital, a new way of extracting wealth from our shores is employed, continually enriching those who control the technology and our economy while impoverishing us, destroying local livelihoods, ravaging our natural resources, and poisoning our environment. The first wave has ebbed, but we are still deep within the second wave, and the third wave has already started lapping our shores. Responding to the third globalization wave How do we respond to globalization? To the first wave, we responded with independence struggles, ranging from armed revolutions to peaceful lobbies for independence. Economically, our responses ranged from outright confiscation and nationalization of foreign property, to negotiated purchases of foreign corporations at full commercial prices. Thus, historically, we can identify a period of economic nationalism worldwide, when newly-independent countries in Asia, Africa and Latin America tried to regain control of their economies through a range of policies favoring local economic interests and institutions. Then came the post-colonial second wave of globalization, both in response to our independence struggles and as a consequence of internal developments within the economies of powerful countries themselves. Responses to this second wave have ranged from communist-led armed struggles, to elite-led protectionist regimes. Many of these responses have floundered as crises upon crises beset our countries, enabling former colonial masters to recover much of their early privileges. In general, the second wave of globalization remains dominant over our national and community life, having managed so far to counter all the various responses that have confronted it. We're still under the second wave, and now comes the third wave. How do we respond to this new wave, and how should our response be related to our continuing efforts to confront the second wave of globalization? A Green response We can learn from some of the responses of social movements which have confronted specific issues involving the information economy. An illustrative set of responses can be seen in the program of the Philippine Greens for a non-monopolistic information sector. The following are the major elements of this program (Society, Ecology and Transformation by the Philippine Greens, 1997): "1. The right to know. It is the government's duty to inform its citizens about matters that directly affect them, their families or their communities. Citizens have the right to access these information. The State may not use 'national security', 'confidentiality of commercial transactions', or 'trade secret' reasons to curtail this right. "2. The right to privacy. The government will refrain from probing the private life of its citizens. Citizens have the right to access information about themselves which have been collected by government agencies. The government may not centralize these separate databases by building a central database or by adopting a unified access key to the separate databases. Nobody will be forced against their will to reveal any information they do not want to make public. "3. No patenting of life forms. The following, whether or not modified by human intervention, may not be patented: life forms, biological and microbiological materials, biological and microbiological processes." Life form patenting has become a major global issue, as biotechnology corporations move towards the direct manipulation and commercialization of human genetic material. Biotech firms are engaged in a frantic race to patent DNA sequences, microorganisms, plants, animal, human genetic matter and all other kinds of biological material, as well as in all kinds of genetic modification experiments to explore commercial possibilities. We much launch strong national and international movements to block these monopolistic moves and experiments, and to exclude life forms and other biological material from our patent systems. "4. The moral rights of intellectuals. Those who actually created an intellectual work or originated an idea have the right to be recognized that they did so. Nobody may claim authorship of works or ideas they did not originate. No one can be forced to release or modify a work or idea if he/she is not willing to do so. These and other moral rights of intellectuals will be respected and protected. "5. The freedom to share. The freedom to share and exchange information and knowledge will be recognized and protected. This freedom will take precedence over the information monopolies such as intellectual property rights (IPR) that the State grants to intellectuals." A specific expression of the freedom to share is the "fair-use" policy. This policy reflects a historical struggle waged by librarians who see themselves as guardians of the world's storehouse of knowledge, which they want to be freely accessible to the public. Librarians and educators have fought long battles and firmly held their ground on the issue of fair-use, which allows students and researchers access to copyrighted or patented materials without paying IPR rents. They have recently been losing ground due to the increasing political power of cyberlords. "6. Universal access. The government will facilitate universal access by its citizens to the world's storehouse of knowledge. Every community will be enabled to have access to books, cassettes, videos, tapes, software, radio and TV programs, etc. The government will set up a wide range of training and educational facilities to enable community members to continually expand their knowhow and knowledge. "7. Compulsory licensing. Universal access to information content is best implemented through compulsory licensing. Under this internationally-practiced mechanism, the government itself licenses others to copy patented or copyrighted material for sale to the public, but compels the licensees to pay the patent or copyright holder a government-set royalty fee. This mechanism is a transition step towards non-monopolistic payments for intellectual activity." Many countries in the world have used and continue to use this mechanism for important products like pharmaceuticals and books. Compulsory licensing is an internationally-recognized mechanism specifically meant to benefit poorer countries who want to access technologies but cannot afford the price set by IPR holders, but even the U.S. and many European countries use it. "8. Public stations. Universal access to information infrastructure is best implemented through public access stations, charging at subsidized rates. These can include well-stocked public libraries; public telephone booths; community facilities for listening to or viewing training videos, documentaries, and the classics; public facilities for telegraph and electronic mail; educational radio and TV programs; and public access stations to computer networks." Information infrastructures are very expensive. Building national networks from scratch may take several billion dollars. Providing a personal computer to each family may take a few more billion dollars. Yet, much of these hardware will become obsolete within a few years of use, after which we will again be forced to update the entire hardware infrastructure for several billion dollars more. The act of participation seems to entrap us at once into becoming captive markets of information economies. How do we ensure access at a much lower cost? The answer is in universally-accessible public facilities. In the same way that the problem of Third World transport is solved by public transportation and not by a "one-family/one-car" policy, the problem of universal access in the information sector can be solved by public work/access stations and not by a "one-family/one-computer" policy. Another approach in building public domain information tools is to support non-monopolistic mechanisms for rewarding intellectual creativity. Various concepts in software development and/or distribution have recently emerged, less monopolistic than IPRs. These include shareware, freeware, "copyleft" and the GNU General Public License (GPL). The latter is the most developed concept so far, and has managed to bridge the transition from monopoly to freedom in the information sector. In the personal computer arena, for example,the most significant challenger to the absolute monopoly of Microsoft Windows is the freely-available Linux operating system, which is covered by the GPL. The first step in breaking up monopolies may be competition. But competition eventually leads to domination by the strong and those who can compete best, leading us back to monopolies. Isn't it better to transcend competition and move further towards cooperation? This means a stronger public sector and sharing meager resources to be able to afford expensive but necessary facilities. In the information sector, this means building information infrastructures, tools and contents which are in the public domain. "9. The best lessons of our era. While all knowledge and culture should be preserved and stored for posterity, we need to distill the best lessons of our era, to be taught -- not sold -- to the next generations. This should be a conscious, socially-guided selection process, undertaken with the greatest sensitivity and wisdom. It is not something that can be left to a profit-oriented educational system, circulation-driven mass media, or consumption-pushing advertising." These responses must also be linked with ongoing struggles against the second wave of globalization. By doing so, we can bring together the widest range of people, whose unity and joint action can bring about a political structure that can comprehensively address the challenges of globalization. As the Philippine Green program indicates, one of the tasks of such struggles is to develop a non-monopolistic information sector, where intellectual activity is rewarded through non-monopolistic mechanisms which are more consistent with the social nature of information. This will involve a radical rethinking of property concepts in the information sector, reinforcing similar demands for property restructuring in the industrial and agriculture sectors. Eventually, enough social forces should be mustered to confront squarely the powerful forces of globalization. We can expect this historic confrontation to demand from us the same kind of courage, sacrifice and heroism which the earlier anti-colonial struggles demanded from our national heroes. How we rise up to this challenge will determine whether our children and grandchildren will live as neo-slaves under a global system as cruel and heartless as the colonial system of old, or as free citizens living in communities where knowledge and culture are again freely-shared social assets, where industrial machinery is appropriately designed to serve and not to enslave human labor, and where ecology is the organizing principle in agriculture. Final lesson There is one final lesson, among so many, that our own colonial past teaches us. The first Spanish colony was set up in the Philippines in 1565. Over the next three centuries, colonization would encroach on most of the archipelago, except the Muslims of Mindanao and the upland indigenous tribes. Isolated rebellions would occur but could not shake Spanish rule. In 1864, a public manifesto by a Filipino priest began a Propaganda Movement, which eventually awakened our people's anti-colonial consciousness. In 1896, a full-scale revolution broke out. By 1898, the revolution had for all intents and purposes defeated Spanish colonialism. It took some three hundred years before we Filipinos shook off the colonial mentality that immobilized most of our people and made them vulnerable to Spanish rule. The campaign for the Filipino mind took another thirty years to win. Within three years of anti-colonial armed struggle against Spain, victory was in sight. The struggle to unmask the colonial monster was ten to a hundred times more difficult than the struggle to bring it down. Let us keep this lesson in mind today, when we are yet at the early stages of unmasking the monster of globalization. Let not the seeming immensity of this task cloud our vision of the future, when our communities and nations shall at last be free to chart their own destinies guided by the principles of ecology, social justice and self-determination. 5 February 1998 Roberto Verzola 108 V.Luna Road Extension Sikatuna Village 1101 Quezon City, Philippines Tel.: (63-2) 921-5165 Email: rverzola@phil.gn.apc.org