PERSPECTIVE

Human rights and human development

V.R. KRISHNA IYER

On the fundamental contradiction between World Bank-IMF political economy and universal happiness of people, especially of developing countries.

DEVELOPMENT, in modern jargon, is a dubious word and can wear the attire of transparency and hypocrisy. It is this gaping semantic gap that makes our process of Western-style development a disaster of the nation. The basic structure of Indian democratic development is strained to breaking point by the structural adjustment forced on it by World Bank-International Monetary Fund (IMF) strategies using the double-speak of globalisation, privatisation and marketisation. The fundamental flaw in the management of power politics vis-a-vis Third World countries is the confusion between growth and development, between eradication of mass poverty and glamour of class opulence, between Reagan-Thatcher globonomics and Gandhi-Mao distributive justice. Once we break through this contradiction between the social justice quintessence of our Constitution and the affluenza of macro-corporate operators, only then will development with a human face and human rights where everyone has stakes in the State become a ubiquitous reality.

KAMAL KISHORE/REUTERS

A protest in New Delhi against the World Bank.

Human Rights have a universal character where the poor are human with a title to equal opportunity for development. But the paradox of our times is that the IMF and the World Bank, both of which originated in Bretton Woods to save post-World War earth from grim economic depression, specifically had development and stability as their objective. And yet the major developed countries run the show with only one country, the United States, having effective veto. The developing countries, where human rights and human development are the hunger of the people, had little hold on the two institutions.

The most dramatic change in these institutions occurred in the 1980s, the era when Ronald Reagan and Margaret Thatcher preached free market ideology, making the Bank-Fund the new missionary institutions to proselytise the socialistic part of the planet. The Ministers of Finance in poor countries, including India, were willing to become converts, if necessary, to obtain the funds, although people in these countries were sceptical and even hostile. The fall of the Berlin wall provided a new arena for the transition to a market economy penetrating Eastern Europe.

Instead of eradicating poverty, the Bank-Fund duo, driven by the collective will of the G-7 countries, pressured the Third World Finance Ministers and Treasury Secretaries, silencing the people's democratic debate about alternative strategies. The first fatal mistake of the market economy strategy was that most prices were freed overnight in 1992, setting in motion an inflation that wiped out savings and moved up the problem of macro-stability to the top of the agenda. Globalisation has promises and perils, with grave implications. Joseph Stiglitz, in his book Globalisation and Its Discontents, says:

What is this phenomenon of globalisation that has been subject, at the same time, to such vilification and such praise? Fundamentally, it is the closer integration of the countries and people of the world which has been brought about by the enormous reduction of costs of transportation and communication, and the breaking down of artificial barriers to the flows of goods, services, capital, knowledge, and (to a lesser extent) people across borders. Globalisation has been accompanied by the creation of new institutions that have joined with existing ones to work across borders. In the area of international civil society, new groups, like the Jubilee movement pushing for debt reduction for the poorest countries, have joined long established organisations like the International Red Cross. Globalisation is powerfully driven by international corporations, which move not only capital and goods across borders but also technology.

In our personal lives we would never follow ideas blindly without seeking alternative advice. Yet countries all over the world were instructed to do just that. The problems facing developing countries are difficult, and the IMF is often called upon in the worst of situations, when the country is facing a crisis. But its remedies failed as often, or even more often than they worked. IMF structural adjustment policies — the policies designed to help a country adjust to crises as well as to more persistent imbalances — led to hunger and riots in many countries; and even when results were not so dire, even when they managed to eke out some growth for a while, often the benefits went disproportionately to the better-off, with those at the bottom sometimes facing even greater poverty. What astounded me, however, was that those policies weren't questioned by many of the people in power in the IMF, by those who were making the critical decisions. They were often questioned by people in the developing countries, but many were so afraid they might lose IMF funding, and with it funding from others, that they articulated their doubts most cautiously, if at all, and when only in private. But while no one was happy about the suffering that often accompanied the IMF programmes, inside the IMF it was simply assumed that whatever suffering occurred was a necessary part of the pain countries had to experience on the way to becoming a successful market economy, and that their measures would, in fact, reduce the pain the countries would have to face in the long run.

The dehumanised developmental dimension of the Bank-Fund institutions has been the bane of their operations. Globalisation has become anti-democratic and free market ideology the new evangelism of the IMF and the World Bank, which have been pushed down the throats of reluctant poor countries which needed loans and grants. Says Stiglitz, one-time Chief Economic Adviser:

The two institutions could have provided countries with alternative perspectives on some of the challenges of development and transition, and in doing so they might have strengthened democratic processes. But they were both driven by the collective will of the G-7 (the governments of the seven most important advanced industrial countries), and especially their Finance Ministers and Treasury Secretaries, and too often the last thing they wanted was a lively democratic debate about alternative strategies. A half century after its founding, it is clear that the IMF has failed in its mission. It has not done what it was supposed to do - provide funds for countries facing an economic downturn, to enable the country to restore itself to close to full employment (pages 14-15).

In theory the role of foreign investment seems positive: Foreign investment is not one of the three main pillars of the Washington Consensus, but it is a key part of the new globalisation. According to the Washington Consensus, growth occurs through liberalisation, "freeing up" markets. Privatisation, liberalisation, and macrostability are supposed to create a climate to attract investment, including from abroad. This investment creates growth. Foreign business brings with it technical expertise and access to foreign markets creating new employment possibilities. Foreign companies also have access to sources of finance, especially important in those developing countries where local financial institutions are weak. Foreign direct investment has played an important role in many - but not all - of the most successful development stories in countries such as Singapore and Malaysia and even China.

Having said this, there are some real downsides. When foreign businesses come in they often destroy local competitors, quashing the ambitions of the small businessmen who had hoped to develop homegrown industry. There are many examples of this. Soft drinks manufacturers around the world have been overwhelmed by the entrance of Coca-Cola and Pepsi into their home markets. Local ice cream manufacturers find they are unable to compete with Unilever's icecream products.

Banking is another area where foreign companies often overrun local ones. The large American banks can provide greater security for depositors than do small local banks (unless the local government provides deposit insurance). The U.S. government has been pushing for opening up of financial markets in developing nations. The advantages are clear: the increased competition can lead to improved services. The greater financial strength of the foreign banks can enhance financial stability. Still, the threat foreign banks pose to the local banking sector is very real.

In practice this means that Western speculators pump money into a developing country, then take it out at the first sign of trouble. "A nation's reserves can drain in days, hours," as Malaysia, Indonesia, etc., recently found to their dismay. In the final stages of the World Bank's package comes what Stiglitz calls "the IMF riot". The enforcement of "market pricing" makes food and water unaffordable to people who then riot - as Indonesians did in 1998 (food and fuel subsidies for the poor were removed under IMF orders), Bolivians did in 2000 (water rates were raised) and Ecuadorians did this year (cooking gas prices were ordered raised by World Bank.) IMF-World Bank officially records that its "reform" will be bringing about "social unrest". They offer their own solution too: Put down rioters with "political resolve". Third World farmers commit suicide because of WTO policies? The answer must be: Put down the survivors with political resolve. "They don't care," Stiglitz says about the corporations he had worked with, "if people live or die."

John Pilger, in his book Hidden Agendas, has drawn attention to the discontent of the masses against Bank-Fund policies designed to expand exploitative markets and diminish projects of human welfare at lesser levels of the populace.

As labour is cheapened and cast aside; as social legislation is eliminated and whole countries are transformed into one big plantation, one big mining camp, one big `free trade' zone stripped of rights, sovereignty and wealth; as the rise of technology exacerbates class differences rather than abolishing them, increasing the vulnerability and tempo of work; as the guardians of this faith reduce `free speech' to esoteric jargon, the warnings now come from within the new orthodoxy itself.

Beware `the rumbling out there', says the President of the Federal Reserve Bank. `People are dangerously suffering from globophobia,' says a senior floor trader in New York. `The magnitude of change in the world economy since the end of the Cold War,' wrote the eminent American economist, David Hale, `has been so dramatic it has given rise to a new political phenomenon ... voters now view trade issues in terms of domestic class struggle. In his book, Has Globalisation Gone too Far, another Harvard high priest, Dano Rodrik wrote: `The international integration of markets for goods, services and capital is pressuring societies to alter their traditional practices (so much that) in return, broad segments of these societies are putting up a fight.

The fight has only just begun.

(pages 160-161)

The developmental debate vis-a-vis Third World countries takes us to the view that the U.S and the Bretton Woods institutions should show transparency and equity. If America subsidises its farmers and argues that India should abandon subsidies, is not the plea shady? If foreign corporates escape taxes, wage hikes and environmental restraints at home and dump goods and services on poor countries, destroying their agriculture and industry, is it development justice? Aggressive American multinational corporations (MNCs), abetted by Bank-Fund policies would be a menace to developing countries unless radical reform makes for a humane global economy. The authors of Food First present the following demands under the telling heading "Make America safe for the world":

Outlaw government assistance through AID and OPIC and indirectly through the World Bank to U.S. private corporations investing in underdeveloped countries.

Abolish all tax laws that encourage American corporations to locate abroad in order to escape environmental, wage, and tax laws here.

End economic assistance to any country not actively democratising control over food-producing resources (including countries like the Philippines and Pakistan) where land reform is in rhetoric only.

Promote economic assistance, not as loans but as grants untied to purchases in the United States, to countries where steps are being taken to democratise control over agricultural resources, such as Vietnam and Mozambique (pages 497-498).

The failures of globalisation are founded on the fact that in setting the rules of the game, commercial and financial interests and mindsets have pervaded within the international economic institutions. A narrow view of the role of government and a larger role for markets has come to prevail, which is forced upon the developing countries and their weak economies. The lens through which international institutions and cabinets of developed countries look at problems ignores national interest and see the world as macro-market cosmos.

Absence of transparency and prevalence of secrecy mar the discovery of the truth about the IMF and the World Bank. Ignorance is slavery and manipulated information conditions the developing countries to colonialism.

Is the situation impossible or are the problems intractable? Reforming the World Bank and the IMF and the mode of development assistance are not difficult, given Third World readiness to do battle. Let me quote Stiglitz under the heading "Reforming the WTO and balancing the trade agenda":

The global protests over globalisation began at the WTO meetings in Seattle, Washington, because it was the most obvious symbol of the global inequities and the hypocrisy of the advanced industrial countries. While these countries had preached and forced the opening of the markets in the developing countries to their industrial products, they had continued to keep their markets closed to the products of the developing countries, such as textiles and agriculture. While they preached that developing countries should not subsidise their industries, they continued to provide billions in subsidies to their own farmers, making it impossible for the developing countries to compete. While they preached the virtues of competitive markets, the United States was quick to push for global cartels in steel and aluminum when its domestic industries seemed threatened by imports. The United States pushed for liberalisation of financial services, but resisted liberalisation of the service sectors in which the developing countries have strength, construction and maritime services (pages 244-245).

What we are not fully aware of was another danger, what has come to be termed bio-piracy, international companies patenting traditional medicines or foods, it is not only that they seek to make money from "resources" and knowledge that rightfully belongs to the developing countries, but in so doing, they squelch domestic firms that have long provided the products. While it is not clear whether these patents would hold up in court if they were effectively challenged, it is clear that the less developed countries may not have the legal and financial resources required to challenge the patent. This issue has become a source of enormous emotional, and potentially economic, concern all around the developing world.

International economic justice requires that the developed countries take actions to open themselves up to fair trade and equitable relationships with developing countries without recourse to the bargaining table or attempts to extract concessions in exchange for doing so (page 246).

One cannot more than agree with Joseph Stiglitz in the last passage to his excellent book:

If we are to address the legitimate concerns of those who have expressed a discontent with globalisation, if we are to make globalisation with a human face succeed, then our voices must be raised. We cannot, we should not, stand idly by (page 252).

India has betrayed Mahatma Gandhi and Jawaharlal Nehru and today a consumerist life-style and corrupt national ethos have taken over the values of the Founding Fathers and the Father of the Nation. The Gandhian concept of development rejected the idea that it should aim primarily at the creation of material wealth or the satisfaction of insatiable, endlessly multiplied needs. In so far as we have made the modern materialistic craze our goal, he wrote, `so far are we going downhill in the path of progress' (page 19).

The U.K Commission on IPR has recently suggested that there are no circumstances in which the most fundamental human rights should be subordinated to the requirement of patent protection. The report said that the last one year has witnessed not only the worst in human exploitation of drug patent at the cost of millions of human lives, but also increasing awareness in the international community, of the adverse impact of strong product patent regimes in respect of drugs and medicines. Such patent regime has been used to support the sky-rocketing prices of vital life-saving drugs leading to heavy death toll of millions of victims of AIDS/HIV and other pandemics. Many innocent women and children died because neither they nor their governments were able to pay the unconscionably high prices claimed by MNCs for their patented drugs.

The plea of incentive implicit in product patents is myth. There is much less evidence from developing countries indicating that IPR systems are a key stimulus for innovation. But the evidence suggests that the IP system hardly plays any role in stimulating research on diseases particularly prevalent in developing countries, except for those diseases where there is also a substantial market in the developed world (for example, diabetes or heart disease).

Apart from international measures to facilitate access to medicines, developing countries need to adopt IP rules in their legislation and practices that limit the extent of patenting and facilitate the introduction of generic competition.

Countries need to ensure that their IP protection regimes do not run counter to their public health policies and that they are consistent with and supportive of such policies. Life is the first human right.

A revolutionary transformation, tuned to the Directive Principles of State Policy under the Constitution, must be based on the constellation of fundamentals in the governance of the country as outlined in the Directive Principles of State Policy. To fail here is to betray history and the generation of which those now in power are trustees. The Bretton Woods institutions are welcome to help, but not at the surrender of our self-reliance or offer of freedom of free play for big business to trade on our hunger and want. Will the leopard change its spots? Will India lay honest wreaths at Gandhi's Rajghat?

The right to development is itself a human right. International jurisprudence guarantees human rights including development. All is not lost yet. But to build a brave new Bharat where We, the People of India, without exception, have title to human rights and development, a stern determination to conform to the Preamble to the Constitution is a sine qua non.

Globalisation and privatisation, as a process now in progress, is disinvestment of Independence and dehumanisation of swaraj culture! Globalisation with a human face is the only process of harmonisation of human rights and human development.

Justice V.R. Krishna Iyer is a former Judge of the Supreme Court.

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