A Citizen’s Guide to the Globalisation of Finance
by Kavaljit Singh
Zed Books, London, 1999
pp xt+187, INR 120
ISBN 81 86816 08 9
Some time ago, in a currency dealer’s room in one of the big banks in Singapore, this Nepali writer was amazed to see sums equalling Nepal’s GDP changing hands every hour. The sheer volume of money that was multiplying itself was astonishing. This big world of money was difficult to comprehend. It was a time to wonder what an ordinary citizen from South Asia might think about the astronomical amounts of money that today float around in the world of finance, and whether s/he had any idea of how his/her life was being impacted by that movement.
A Citizen’s Guide to the Globalisation of Finance is a near-perfect guide for people who have heard and know a little, but have never quite figured out the entire gamut of finance, especially its global reach. Kavaljit Singh provides a base from which one can begin to understand the world of international finance, how it is beyond the power of national governments to control, and also where and how it goes wrong.
The book guides the reader through the process of economic globalisation and looks at its trends, key players and instruments. It then focuses on the economic flu that has struck countries from Mexico to Thailand, and how the contagion spread amongst the East Asian tigers in 1997. It also evaluates the prescriptions of big daddies such as the International Monetary Fund, analyses their efficacy, and provides advice on how to monitor globalisation and provide resources for action. The conclusion is simple enough: when capital flows are uncontrolled and when currency transactions exceed a country’s total reserves, it is a recipe for collapse and could easily happen again.
So how was it that the Indian economy came out of the East Asian crisis more or less unscathed? The author believes that some degree of control remained in South Asia and that did not allow sudden outflows of cash. Relatively insulated from international capital markets, India was thus cushioned. Thailand used to be the ultimate IMF dream model — it had left itself wide open to short-term capital flows and speculators. During its globalised phase Thailand benefited from inflows, but the money flowed right back when, as they say, someone sneezed. This fleeting nature of global capital flows was not properly regulated, and was the reason for the crisis. The Thais had to go back to the same IMF, but the bail-out turned out to be more like a sell-out.
The book cites numerous examples of bullying by supranational entities like the IMF that dictate every facet of the economy of the countries they bail out. These institutions, themselves very undemocratic and unaccountable, impose on nations that have to rely on them, values that are as alien to their own inner workings.
Like-minded readers may enjoy a chuckle or two over snide remarks against the IMF and the World Bank that pepper the book. A sample: “Rather than policing global finance capital on behalf of the people, the IMF is policing the people on behalf of global finance capital”.