IN spite of such massive sweep and power, globalisation is currently facing a whole lot of problems and threats. The wave of anti-globalisation protests we have been seeing from Seattle to Genoa may not yet have reached a level where we can talk about a serious political challenge to globalisation, but to be sure these protests have crossed the level of mere ethical dissent and academic questioning. They have acquired an unmistakable mass dimension and the increasing mass participation of the working class and the unemployed youth is rooted in the economic crisis and uncertainty enveloping the world.

Let us begin with the growing shadow of crisis enveloping the entire world economy. The rate of growth, the most favourite indicator of bourgeois economists, is languishing at a very low level in almost all developed countries. Japan is awaiting recovery from its stagnation for nearly a full decade. Europe has been experiencing low growth and a disturbingly high rate of unemployment for quite some time. And finally the US, which maintained impressive growth during almost the entire 1990s has also joined the downturn. In fact, the sudden outbreak of the crisis in the US has been described by some critical observers as the US economy “hitting the wall at 90 kmph.” This massive canvas of stagnation, with almost the entire developed world mired in a kind of synchronised recession, is indeed remarkable. In the US, parallels are being frequently drawn with the Great Depression of 1929-33.

The crisis has of course been most glaringly manifest in the financial sector. In the early 1990s we first had the Mexican meltdown followed by the East Asian turmoil which spread to other regions and described as the ‘Asian Flu’. In the words of the noted Canada-based analyst of speculative finance Michel Chossudovsky “This Worldwide crisis of the late twentieth century is more devastating than the Great Depression of the 1930s. It has far-reaching geo-political implications; economic dislocation has also been accompanied by the outbreak of regional conflicts, the fracturing of national societies and in some cases the destruction of entire countries. This is by far the most serious economic crisis in modern history.”

The driving force behind this crisis, according to him, is the worldwide scramble to appropriate wealth through “financial manipulation”, which he describes as “financial warfare”. In this war, the outright “conquest of nations” meaning the control over productive assets, labour, natural resources and institutions can be carried out in an impersonal fashion from the corporate boardroom: commands are dispatched from a computer terminal or a cell phone. The relevant data are instantly relayed to major financial markets — often resulting in immediate disruptions in the functioning of national economies.

In Korea, Indonesia and Thailand, the vaults of the central banks were pillaged by institutional speculators while the monetary authorities sought in vain to prop up their ailing currencies. In 1997, more than 100 billion dollars of Asia's hard currency reserves had been confiscated and transferred (in a matter of months) into private financial hands. In the wake of the currency devaluations, real earnings and employment plummeted virtually overnight leading to mass poverty in countries which had in the post-War period registered significant economic and social progress. Russia has already suffered a similar fate since the first injection of IMF “shock therapy” in 1992. Some 500 billion dollars worth of Russian assets — including plants of the military industrial complex, infrastructure and natural resources — have been confiscated (through the privatisation programmes and forced bankruptcies) and transferred into the hands of Western capitalists. Now even in Japan — where the yen has tumbled to new lows — “the Korean scenario” is viewed (according to economist Michael Hudson), as a “dress rehearsal” for the take over of Japan’s financial sector by a handful of Western investment banks.

Interestingly, George Soros, the notorious Hungarian currency speculator who made news by raking in billions from the 1992 devaluation of the British Pound, has emerged as a key commentator on the global financial crisis. In 1998 he came up with a book entitled The Crisis of Global Capitalism. It may be recalled that he claims to have played his bit in engineering the Soviet collapse with his Open Society Fund, but in 1989 when he proposed a second edition of the post-WWII Marshall plan to enable post-Soviet Russia to reconstruct its economy he was greeted with derisive laughter. Now he argues that the global capitalist system is coming apart at the seams. The decline in the US stock market is only a belated symptom of the profound problems afflicting the world economy.

Financial markets, he tells us, are inherently unstable, whereas the global capitalist system is based on the belief that financial markets, left to their own devices, tend towards equilibrium. This belief, he insists, is false. Financial markets are given to excesses and if a boom/bust sequence progresses beyond a certain point it will never revert to where it came from. His chosen imagery for financial markets therefore is not a pendulum oscillating around and eventually returning to its equilibrium position, but a wrecking ball knocking over one economy after another.

While Soros deals primarily with financial markets, historian Robert Brenner in his much-acclaimed book-length essay “The Economics of Global turbulence” (New Left Review, May-June 1998) describes the crisis as a case of long downturn since 1965 and especially since 1973 (the oil shock), in contrast to the long post-war boom since 1945, caused by falling profitability of capital. This falling rate of profit is in turn attributed to over-investment and overproduction. The origins of over-capacity and overproduction are to be found in the profound intensification of international competition that took place in the later 1960s, as a consequence of the accelerated entry of German, and especially Japanese manufacturers, into world markets, which brought a reduction of US manufacturing profitability by more than 40% in the period between 1965 and 1973.

The profitability problem was not long confined to the United States, but quickly came to affect Japan, Germany, and most of the rest of the advanced capitalist world, when the dollar was radically devalued at the time of the world money crisis and collapse of Bretton Woods agreement in the early 1970s.

Paradoxically, moreover — and counter to standard economic expectations — manufacturing overcapacity and overproduction did not lead to the expected processes of adjustment, but has persisted right into the present... with the partial (and likely temporary) US profitability recovery of the 1990s more than counterbalanced by sharp profitability slumps in Germany and Japan. Heightened international competition leading to persistent overcapacity and overproduction and eventually resulting in falling aggregate profitability – this is the basic contention of Brenner, and in spite of debates on finer points, he is acclaimed by Marxist economists for having taken the discussion back into the realm of capitalist anarchy, the real economy of over-investment, over-production and the falling rate of profit.