Table Of ContentStructural Revolution in International Business Architecture
Structural Revolution in
International Business
Architecture
Political Economy: Volume 2
Dipak Basu
Nagasaki University, Japan
Victoria Miroshnik
Tsukuba University Graduate School of Management, Tokyo, Japan
© Dipak Basu and Victoria Miroshnik 2016
Softcover reprint of the hardcover 1st edition 2016 978-1-137-53576-4
All rights reserved. No reproduction, copy or transmission of this
publication may be made without written permission.
No portion of this publication may be reproduced, copied or transmitted
save with written permission or in accordance with the provisions of the
Copyright, Designs and Patents Act 1988, or under the terms of any licence
permitting limited copying issued by the Copyright Licensing Agency,
Saffron House, 6–10 Kirby Street, London EC1N 8TS.
Any person who does any unauthorized act in relation to this publication
may be liable to criminal prosecution and civil claims for damages.
The authors have asserted their rights to be identified as the authors of this
work in accordance with the Copyright, Designs and Patents Act 1988.
First published 2016 by
PALGRAVE MACMILLAN
Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited,
registered in England, company number 785998, of Houndmills, Basingstoke,
Hampshire RG21 6XS.
Palgrave Macmillan in the US is a division of St Martin’s Press LLC,
175 Fifth Avenue, New York, NY 10010.
Palgrave Macmillan is the global academic imprint of the above companies
and has companies and representatives throughout the world.
Palgrave® and Macmillan® are registered trademarks in the United States,
the United Kingdom, Europe and other countries.
ISBN 978-1-349-57338-7 ISBN 978-1-137-53578-8 (eBook)
DOI 10.1057/9781137535788
This book is printed on paper suitable for recycling and made from fully
managed and sustained forest sources. Logging, pulping and manufacturing
processes are expected to conform to the environmental regulations of the
country of origin.
A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Basu, Dipak R.
Structural revolution in international business architecture : volume 2:
political economy / Dipak Basu, Victoria Miroshnik.
pages cm
Summary: “Structural Revolution in International Business Architecture
Volume 2 fills important gaps in the existing literature of management
science by providing new and improved methods of optimal control system
modelling. These research methods are applied in a variety of problems of
management science and national economic management. Applications are
on oil field development, energy system modelling, resource modelling, time
varying control of dynamic system of national economy, and investment
planning”—Provided by publisher.
1. International business enterprises. 2. Commercial policy.
3. Economic development. 4. Management. 5. Globalization.
I. Miroshnik, Victoria, 1969– II. Title.
HD62.4.B375 2015
338.8'8—dc23 2015018410
Typeset by MPS Limited, Chennai, India.
To
My parents Walter and Tanya with love
VM
My aunts Mamata Sen and Krishna Dutta with respect
DB
Contents
List of Figures and Tables viii
Introduction 1
1 Implications of Structural Revolution 2
2 Structural Revolution in Russia 22
3 Chilean Revolution 41
4 Globalization and the Philosophy of Life in India 50
5 Globalization and the Philosophy of Life in Japan 65
6 Aims of the New International Business Order 79
7 Victims of the New International Business Order 90
8 Empire of China 129
Conclusion 142
References 147
Index 158
vii
List of Figures and Tables
Figures
2.1 GDP growth rate, USSR 23
2.2 Industrial production growth rate, USSR 24
2.3 Growth and investment, Russia 25
Tables
1.1 Trade restrictions by economic group, 1997–2000 9
1.2 Exports and GDP, 1980–2000 11
1.3 Population living below US$1 per day in developing
countries 1990 and 1998 12
1.4 Sub-Saharan Africa: evolution of employment in the
formal sector during the early adjustment phase 14
1.5 Informal employment as % of labour force (non-agricultural)
in early globalization, selected countries in Latin America 15
1.6 Wage dispersion and real wage changes in manufacturing
in early globalization 16
1.7 Composition of social sector expenditures 17
1.8 Trends in the selected social indicators 18
viii
Introduction
The economic reform programme was started by the International
Monetary Fund (IMF) and World Bank a long time ago—first in Africa.
The aim was to have a structural reform that would make the global
economy more efficient. It was not declared, at that time, what it would
mean in practical terms, but instead a number of critical remarks were
made against the planned economic systems and their inefficiency. The
espoused aim was to remove obstacles against efficient running of
the economy. Gradually, and particularly since 1991, after the collapse
of the Soviet Union, it was clear that by ‘efficient economy’ the IMF and
World Bank meant a free market system of capitalism, not a social market
system of European style. That doctrine was enhanced with the establish-
ment of the World Trade Organization (WTO) to create a revolution in the
trade, production and capital flows in a world unrestricted by any sense of
nationalism. This book is the analysis of the historical process in the first
phase of globalization as promoted by the World Bank, IMF and WTO.
Globalization of production aims to achieve allocative efficiency
on a global scale, irrespective of national interests. In that framework,
the financial needs of the developing countries and the transitional
economies of the ex-socialist countries for their economic develop-
ments will be determined by the multinational companies. In this new
international business order, how the affected countries can progress
and adjust their production and trade are very important questions.
Conflicts of interest between various trade blocs and between owners
and users of resources are inevitable. The tendency is there to create
some new imperial order to gain control over resources and markets.
In such conflicts there are many victims. This book has tried to analyse
that new colonization process and the ongoing conflicts in various parts
of the world.
1
1
Implications of Structural
Revolution
It is essential to understand the philosophy of ‘globalization’.
Globalization signifies the ultimate rights of multinational companies
to allocate resources according to their own criteria of efficiency, which
may or may not correspond to the national culture of the countries in
which they are operating.
During the colonial period, before the Second World War, the rela-
tionship between the multinational companies and the corresponding
host governments was similar to that between the agents of the oppres-
sor and the oppressed. The doctrine of free trade was used to justify that
aim so that host countries would accept domination of their sovereign
rights in exchange for economic growth.
This chapter examines the overall trends in structural conditions
and their effects related to the international business policy in IMF-
supported adjustment programmes during the early days of globaliza-
tion. Structural reforms, economic reforms and globalizations mean the
same thing; they imply a free market system for the world as a whole
and for each nation. With a free market system, worldwide production
systems can be achieved. This is the ultimate purpose of ‘globalization’.
The aim of the IMF, the World Bank and the World Trade Organization
(WTO) is to create free market systems for each national economy.
In order to understand the nature of this transformation process, it is
essential to understand the philosophy of globalization. An economic
system can be successful if it corresponds to the host country’s culture
or philosophy of life—otherwise it will die out sooner or later. Thus, it
is essential to examine whether the globalization process corresponds to
the basic doctrine of life of the people.
From the mid-18th century to the mid-20th century multina-
tional companies from Britain, France, Holland and Belgium achieved
2
Implications of Structural Revolution 3
globalization; later, during the early 20th century, followed by Japanese
and German multinational companies, in their respective colonies. The
British East India Company forced Indian farmers to produce indigo
and opium for sale to China in order to purchase silk and tea. Britain
used to invest their tax revenues from India to build railroads in the
USA and industries in Brazil and Argentina. There was a huge mobil-
ity of labour too. Indian and Chinese slaves (or indentured labourers)
were employed on the sugar plantations in the West Indies and Latin
America, in railroad construction in Africa and in mining in Australia
and South-East Asia. The European multinational companies, since the
18th century, have created the European empires.
Hudson’s Bay Company in north America, Dutch East India Company
in Indonesia, British East India Company in China and India, Cecil
Rhodes mining company in Africa and Anglo American Oil Company
in the Middle East are some of the examples of multinational companies
supporting their respective governments to gain colonies, which are
now called the ‘developing countries’. That type of globalization was
halted only when, after the Second World War, the Soviet Union became
the victorious power in Europe, a large number of colonies became inde-
pendent and an alternative and very successful strategy of economic
development, ‘planned economy’, became the model for the newly
independent countries. When the power of the Soviet Union was at its
zenith during the 1970s, the developing countries asserted themselves
to implement a ‘new international economic order’, so that they could
reverse the adverse terms of trade of their exports. This was maintained
historically by the developed countries as the source of exploitation.
However, with the destruction of the Soviet Union, the power of the
so-called ‘group of 88’ developing countries disappeared and it was pos-
sible for the developed countries to impose a very new international
business order through three very powerful international organizations:
the International Monetary Fund (IMF), the World Bank and the WTO.
This so-called ‘new order’ or globalization means re-establishment
of the old order that prevailed before 1945. Thus, it should be obvious
that a minority will gain while the majority in the developing countries
experience great loss, because the world in the 21st century seems to
have regressed to the 19th century.
Multinational Companies and National Economies
During the colonial period, before the Second World War, the thesis
put forward by Hobson (1902), Bukharin (1917) and Lenin (1917)
