Books, Articles and Essays
by FR. FELIX RAJ, SJ, DIRECTOR | «
Neo-Liberalism, Globalization and Developing
The issue of Trust and Honesty
Raj Kumar Sen
Fr. John Felix Raj.
International Economic Conference
USA – A Case for Developed
Factors Responsible for
Values as Important Factors
Religion – Promoter of
Scandalous Realities of
Russia as Low Trust Country
India – A case for
Factors Responsible for
Impact of Globalization and
Conclusions and Suggestions
This paper makes an attempt to establish that values like trustworthiness,
truthfulness and honesty play an important role in the economic development of a
country, and this is quite important in the cotemporary era of globalisation and
dominant theory of neo-liberalism. It is divided into five sections. It first
discusses the meaning of trust and honesty in the context of present wide
divergent realities of the rich and poor countries of the world. It has also
used the Corruption Perception Index and the correlation coefficient between the
GDP, corruption and IQ for various groups of countries. Secondly, USA is
presented as a case for developed world and the role of values in its
development is discussed. In this context, the role of moral and ethical values
as propagated by religions is analyzed. In the third section, while discussing
the present situation of developing countries requiring urgent improvement, we
have presented the erstwhile Soviet Union as a low-trust and less honest country
and discussed the case of Indian economy as a case study of the developing
countries. Next, the impact of the present globalization and liberalization on
the developing economies is discussed in the perspective of widespread
corruption and eroded values. Finally, on the basis of experiences of the
developing countries like India, it follows, as we discuss in the concluding
section, that the conventional understanding of development needs rethinking,
and that erosion of values affects economic growth. What are urgently required
are political, economic and judicial reforms, based on accountability,
transparency and an environment of trust and honesty. We call all governments to
introduce measures for making governance more effective, transparent and
Key Words: Trust and honesty, Corruption perception, Development, Globalization,
Ethic and Values.
Globalization and Developing Economies
The issue of Trust and Honesty
Raj Kumar Sen |
John Felix Raj
Conjoint action is possible just in proportion as human beings can rely on each
other. There are countries in Europe, of first-rate industrial capabilities,
where the most serious impediment to conducting business concerns on a large
scale, is the rarity of persons who are supposed fit to be trusted with the
receipt and expenditure of large sums of money.
- John Stuart Mill
Rich and Poor Countries of
The earth is one, but the world is divided. Countries of the world are divided
into rich and poor, developed and developing, advanced and backward, modern and
traditional, south and north, first world (Western Europe, USA and the Pacific-
the capitalist), second world (the Eastern Europe – the socialist) and third
world (Latin America and the Caribbean, Africa, the Middle East, and Asia except
Japan – the developing) and so on. International organizations and institutions
– UN, IMF, WB, and WTO - were founded to heal the wounds of division. But the
sad story is that they themselves are divided and have become mouthpieces of
Look at Table 1. While the developed countries have, according to purchasing
power parity (PPP), more than $ 25,000 as GDP/PC, the developing ones have
around $ 2,500 (just one/tenth of the rich countries). World economies are
divided according to 2003 GNI per capita, calculated using the World Bank Atlas
method, as low income: $765 or less; lower middle income: $766 - $3,035;
middle income: $3,036 - $9,385; and high income: $9,386 or more. Why is it that
rich countries are always rich and poor ones remain always poor? What are the
factors for such realities?
Countries like USA, Germany, Japan have become rich due to domestic resources,
stimulation of industry and economy with scientific and technological
England, France were colonial powers and accumulated resources from their
Australia, South Africa remained as
centers of colonizers.
Singapore, Hong Kong were commercial
centers founded by developed countries.
India, Bangladesh, Pakistan, Sri Lanka and many other countries in Asia were
colonies of European countries. They are today characterized by massive poverty
and illiteracy. They are dependent on the technology of the rich countries.
Countries like Russia, China
are Communist countries with monoculture and homogeneity.
There are many factors, which are responsible for the economic growth and
development of rich countries: domestic resources, industrialization, scientific
and technological advancement, education, efficiency of labour, investment,
commercial interests and trade, colonial accumulations, environmental advantages
and so on. In this paper, we want to establish that values like trustworthiness,
honesty and integrity play an important role in the development of a country.
Ethics and Values
Business schools teach a lot of things - managerial economics, accounting,
marketing, and retailing, among others. Nowadays, they are also trying to
instill something they should have been doing all along - plain old-fashioned
trust, honesty and integrity. They call it "ethics," and a few of them call it
"business ethics" or “development ethics” (as if that was something different
from "regular" ethics), but they are all trying to counteract the loss of trust
and truthfulness that has been created by the massive business frauds of the
last few years.
Ethics is concerned with how a moral person should behave. It refers to
principles that define behaviour as right and wrong. Such principles do not
always dictate a single "moral" course of action, but provide a means of
evaluating and deciding among competing options. [ii] Values are the inner
judgments that determine how a person is and behaves. We translate values into
principles so that they can guide and motivate moral and ethical conduct. Values
are different from ethics. For example, trustworthiness, truthfulness, honesty,
integrity are values. The terms “ethics” and “values” are not interchangeable.
Ethics flow from values and not vice-versa.
Trust, writes Piotr Sztompka, [iii] may be defined as “a bet on the future
contingent actions of others”. When we decide to trust an individual or an
institution, we are not completely certain what is going to happen, that is, if
the person or institution is going to live up to our trust and in fact prove
trustworthy. That is why we differentiate between “blind faith” and trust. Even
if we do not sit down and perform a probability analysis of the risks that our
trust will be abused every time we decide to trust someone, there is usually an
element, however small, of uncertainty. If we were entirely sure that someone
was trustworthy, we would have no need for a word like confidence, that is,
advance belief. Confidence expresses what we believe in advance in something,
but do not know for certain. Trust involves strength, frequency, and reciprocity
of successful repeated interaction.
We would define trust as a belief that the other agents would act in a
predictable way and fulfil their obligations without special sanctions.
differentiate between two levels through which trust relationships have to
develop. The first level of trust is achieved through a predictability of behaviour of the other actors. The second level of trust is reached through
mutual obligations to follow accepted conventions, which are voluntarily taken
by the market actors. We also accept a division between one-sided trust in
institutions and reciprocal trust among business actors. [v]
Trust and honesty are key factors. A prerequisite of trust is honesty. As Jim
Clemmer [vi] explains, honesty is a clear conscience "before myself and before
my fellow human beings." Honesty is the awareness of what is right and
appropriate in one’s role, one’s behavior, and one relationship. With honesty,
there is no hypocrisy or artificiality, which creates confusion and mistrust in
the minds and lives of others. Honesty makes for a life of integrity because the
inner and outer selves are a mirror image.
Honesty is to speak that which is thought and to do that which is spoken. There
are no contradictions or discrepancies in thoughts, words, or actions. Such
integration provides clarity and example to others. To have one form internally
and another form externally creates barriers and can cause damage, since one
would neither be able to come close to anyone else, nor would others want to be
close. Some think, "I am honest, but no one understands me." That is not
honesty. Honesty is as distinct as a flawless diamond, which can never remain
hidden. The worth is visible in one’s actions.
Honesty and integrity are motherhood leadership phrases. And they should be.
They are fundamental to leadership. Honesty and integrity produce trust, which
produces high levels of confidence. High confidence encourages people to dream
and to reach for new horizons. High confidence fosters risk-taking. Risk-taking
and initiative are fundamental to organizational change and improvement. Our
ability to lead others is directly related to our ability to forge strong
relationships. Strong relationships are dependent upon trust. Trust provides the
USA - a Case for Developed
Let us take USA as an example. It is the premier and dominant economy through
the post world war II period. With a population of around 285 million, it is
known as the “Land of opportunities”. It has a little bit of every country,
culture and religion in the world. The USA produces the largest GDP in the
world, valued at $9.87 trillion in 2000. Its GDP per capita is around $ 37,600
in 2002. The real GDP, GDP per capita and inflationary rates have been more or
less representative of a leading world power over the past several decades.
Factors Responsible for
Anchoring US’s economic colossus is a strong industrial sector which has been
crucial factor in generating economic growth, providing job opportunities, and
ensuring national security. Starting from construction boom for canals in 1830s
and railroads in 1840s, industrialization has transformed US economy elevating
the nation to an economic power with a high level of industrial production
capability. A distinctive feature of its successful economy is said to be its
heavy reliance upon market mechanism to allocate resources among competing
desires. The market remains the distinguishing core, the powerful force of the
US economic system.
The multivariate equation has in part contributed to the dynamic efficiency of
the private and public sectors as well as the overall economic prosperity of the
US. According to DeLong and group’s findings, “we are different but we can live
in harmony” has been the formula in the USA where creativity and knowledge are
valued. Tolerance and trust have been main reasons for its undisputed economic
growth. Unity in diversity breeds creativity. Silicon Valley is a concrete
example for this. The Silicon Valley leaders are taking the ethical high road -
and betting that it's the road to success.
You ask the people in silicon Valley what makes their company special. The
immediate answer is: “integrity”. As George Anders, [vii] a Fast Company senior
editor based in SV, puts it, “we live and work in a world where “ the internet
changes everything”. But it heartening to see that some of the smartest
mavericks believe that honesty is still the best policy.
As Ben W Lewis [viii] observes, roughly three-fourth of US GNP derives from labour inputs. High labour productivity is achieved by trained and skilled
labour force, which is in turn, reflects human capital investment, incentive
system, management and cultural factors.
According to J. Bradford DeLong, Claudia Goldin, and Lawrence H. Katz
three major factors responsible for American economic growth are: 1. Human
capital – the knowledge and the skills acquired by practice and experience of labour force; 2. Physical capital – the machine, buildings and infrastructure
that amplify worker productivity and embody technological knowledge; and 3. The
ideas that make the modern industrial technology.
Of these, as they observe, it is the human capital – education, skills, harmony
(trust and moral values like honesty) – that must take the first place when we
think about policy. This is so for human capital has played the significant role
in America’s 20th century economic growth – the increase in average schooling,
the positive effects of policies intended to boost the knowledge and skills of
people, the proper distribution of income that enables people to lead better
lives, a measure of well-being.
There are other factors beneficial for rich countries for their economic
development. William Masters and Margaret McMillian [x] say that climatic
condition – cold weather is a key stimulus. Cold climate plays two important
roles: 1. It makes for the increase of agricultural production; and 2. It saves
people from tropical diseases like malaria and improves life span and immune
system of people.
Values - Important Factors
Germany is different from the US and is one of the most diverse nations in the
wealthy world. Ireland is often shown as the shining example for diversity,
tolerance and honesty. Thailand with its long belief in openness and tolerance
has been rewarded. G Paschal Zachary [xi] enumerates this idea of how
multicultural and peaceful societies grow economically in his book “The Global
There are contrasts – situations that are different from US or Germany among
rich countries. Japan wants the illusion of oneness or China enforces an
unbending homogeneity. The communist government upholds the myth of Chinese
oneness while completely ignoring the proven benefits of diversity. China is
often cited as an awoken giant. But the biggest drawback seems to be that it is
the world’s largest official monoculture.
Susan Rose Ackerman [xii] has found in her study that honesty and trust affect
the functioning of the state and the market, and conversely, the quality of
formal rules and institutions has an impact on personal trust. While analysing
the relationship between trust and government, she stresses the mutual
interaction between trust and democracy in improving development, and the impact
of corruption leading to decline in development.
Corruption Perceptions Index 2003
The CPI 2003 Score relates to perceptions of the degree of corruption as seen by
business people, academics and risk analysts, and ranges between 10 (highly
clean) and 0 (highly corrupt). A total of 15 surveys were used from nine
independent institutions, and at least three surveys were required for a country
to be included in the CPI.
|GDP/Per Capita 2002 ($) with PPP
||Degree of Development
||Papua New Guinea
|GDP/Per Capita 2002
|Developed Countries Correlation Coefficients
If integrity is already high, improvement in integrity takes an even greater
||IQ to GDP
||Corrupt to GDP
||IQ to Corrupt
|Developing Countries Correlation Coefficients
If integrity is medium, IQ takes equal importance to integrity.
||IQ to GDP
||Corrupt to GDP
||IQ to Corrupt
|Underdeveloped Countries Correlation Coefficients
If integrity is low, IQ takes a great importance towards GDP.
||IQ to GDP
||Corrupt to GDP
||IQ to Corrupt
|The chart and correlations on this page were done by Parhatsathid (Ted)
Napatalung of Thailand.
It shows the correlation between GDP, Corruption and IQ for developed,
developing and underdeveloped countries: 1. For developed countries, if
integrity is already high, improvement in integrity takes an even greater
importance. Higher integrity is associated with higher income; 2. For developing
countries, if integrity is medium, IQ takes equal importance to integrity; and
3. For underdeveloped countries, if integrity is low, IQ takes a great
importance towards GDP. Lower integrity is associated with underdevelopment.
Corruption shows a very high 0.89 correlation to income, while the correlation
of IQ to income is a bit lower at 0.67.
Why does trust vary so substantially across countries? How does trust affect
growth? Zak and Knack [xiii] in their paper present that trust is higher in more
ethnically, socially and economically homogeneous societies and where legal and
social mechanisms for constraining opportunism are better developed. High-trust
societies, in turn, exhibit higher rates of investment and growth. Agents in
this world may trust those with whom they transact, but they also have the
opportunity to invest resources in verifying the truthfulness of claims made by transactors. They characterize the social, economic and institutional
environments in which trust will be high and show that low trust environments
reduce the rate of investment and thus the economy's growth rate. Further, they
show that very low trust societies can be caught in a poverty trap.
Stephen Knack [xiv] explains that trust potentially can influence economic
performance through either of two major channels, “micro-economic” and
“macro-political.” At the micro level, social ties and interpersonal trust can
reduce transactions costs, enforce contracts, and facilitate credit at the level
of individual investors. At the macro level, social cohesion underlying trust
may strengthen democratic governance, [xv] improve the efficiency and honesty of
public administration, [xvi] and improve the quality of economic policies.
Esa Mangeloja [xviii] of University of Jyvaskyla, Finland, in a study shows that
moral institutions and ethics affect the economic development, as for example;
trust and honesty are essential requirements for emerging economic activity.
Robert Putnam’s [xix] well-known study of Italy shows that social trust is the
density and weight of civil society. Social trust teaches individuals the noble
art of living together, which has an impact on economic growth. This is how
Putnam introduces the idea:
Whereas physical capital refers to physical objects and human capital refers to
the properties of individuals, social capital refers to connections among
individuals – social networks and the norms of reciprocity and trustworthiness
that arise from them. In that sense social capital is closely related to what
some have called “civic virtue.” The difference is that “social capital” calls
attention to the fact that civic virtue is most powerful when embedded in a
sense network of reciprocal social relations. A society of many virtuous but
isolated individuals is not necessarily rich in social capital.
In other words, interactions enable people to build communities, to commit
themselves to each other, and to knit the social fabric. A sense of belonging
and the concrete experience of social networks (and the relationships of trust
and tolerance that can be involved) can, it is argued, bring great benefits to
Zak and Knack [xx] demonstrate that interpersonal trust substantially impacts
economic growth, and that sufficient interpersonal trust is necessary for
economic development. Policies must be trust-raising if policy makers seek to
stimulate economic growth. Policies that enhance freedom, build civic culture,
reduce income inequalities, raise educational levels, strengthen the rule of law
and facilitate interpersonal understanding, all of which raise trust. Trust,
honesty and democracy are the foundations of abiding prosperity.
Douglass North [xxi] has argued “the inability of societies to develop
effective, low-cost enforcement of contracts is the most important source of
both historical stagnation and contemporary underdevelopment in the Third
World.” Spot market transactions allow some gains from trade, but most of the
potential benefits from specialization will be forgone in the absence of any
trust-dependent trades, i.e. trades that occur over time or across space, and
which are thus subject to opportunism on the part of one or both parties to the
transaction. For example, goods and services may be provided in exchange for a
promise of a future payment. Creditors loan money to debtors on the promise of
future repayment. Managers hire employees to accomplish tasks that are difficult
to monitor or measure.
Leadership quality is directly related to relationship with people. Strong
relationships are dependent on values – trust, truthfulness and honesty.
Building trust and being truthful is essential for strong relationships and to
the success of organisations. Unfortunately, values are not always present. Many
studies show that mistrust of management and low morale are significant factors
in the widening “we-they” gap between employers and employees. In organizations
where there are unethical business practices, cynicism runs rampant and
employees feel an ever-diminishing commitment to their organization?
situation will never change if there are no strong and trustworthy leadership at
While crime doesn't pay, being trustworthy does pay off. One study of the eight
biggest automobile manufacturers in Japan, South Korea, and the United States,
along with 435 of their suppliers, looked at the economic value of trust
(defined as "confidence that the other party will not exploit one's
vulnerabilities"). The results of the research indicated that in all three
countries relationships with higher levels of trust had substantially lower
costs. Trust actually adds value to the relationship because it encourages the
sharing of resources. [xxiii]
Another study commissioned by MacLeans magazine [xxiv]
found that companies
whose employees believe their bosses are good people-managers are the ones with
the strongest shareholder returns. "Where trust in management is high," says
Dawn Bell, a Vancouver-based senior consultant with Watson Wyatt Worldwide, "it
is incredible what employees can do to drive business success. In organizations
where the trust and confidence has gone, it is very difficult just to keep the
Here is a first hand report of Venezuelan situation of Mark Tweito.
[xxv] “Having now lived for over a year in Venezuela, I have been able to put my
finger on one of the reasons I feel that Venezuela is not able to economically
advance at the level it could. It is not that Venezuelans are lazy, as many of
them work long hours for little pay. It is not a matter of intelligence either,
as most Venezuelans are able to grasp difficult concepts and are able to make do
with the materials at hand in order to solve problems. However, there is a
rampant problem with distrust. This arises from the rampant corruption on the
part of many citizens. It is simply harder to make business when trust is
lacking. If Venezuelans want to improve their economy, one of the best ways
would be to act trustworthy.”
Religion – Promoter of Moral
and Ethical Values
Max Weber’s famous theory about capitalism posits that religion affects the
economy by influencing certain individual traits. These traits, in turn, may
make people more or less economically productive. Weber stressed the Protestant
ethic that honesty, ethics and other kind of values influence individuals who
influence the economy.
We cannot deny the role of religion or values preached by religion in economic
development. Most of the rich countries in the west, the first ones to develop,
are Christian – either predominantly Catholic or Protestant or both. Germany is
about 50/50 Catholic and Protestant. USA, France, England and other developed
countries are more or less in similar situations. Christianity, as an organized
religion has spread systematic education and supported scientific and industrial
growth in western countries.
Christianity is a 2000-year-old religion and is based on the Bible: Old
Testament and the New Testament. Ten Commandments of the Old Testament and the
Gospel values as preached by Jesus – love, justice, peace, fellowship have all
deeply influenced individuals and communities. Christianity is missionary by
nature and has been preaching the Gospel message throughout the world. Although
the Church and the State are separated in the modern world, Christian ethics
have deep root in the socio-economic life of people. Take for example the motto
of USA: “In God we trust”. It is taken from the Old Testament, Psalm 91.
The Church has always emphasized the dignity of human person. “ How we organize
our society – in economics and politics, in law and policy – directly affects
human dignity and the capacity of persons to grow… The State has a positive
moral function as an instrument to promote human dignity”. [xxvi] According to
the social teachings of the Church, the economy must serve people, not the other
way around. All workers have a right to productive work, to decent and fair
wages, and to safe working conditions. They also have a fundamental right to
organize and join unions. People have a right to economic initiative and private
property, but these rights have limits. No one is allowed to amass excessive
wealth when others lack the basic necessities of life.
Catholic teaching opposes collectivist and statistic economic approaches. But it
also rejects the notion that a free market automatically produces justice.
Distributive justice, for example, cannot be achieved by relying entirely on
free market forces. Competition and free markets are useful elements of economic
systems. However, markets must be kept within limits, because there are many
needs and goods that cannot be satisfied by the market system. It is the task of
the state and of all society to intervene and ensure that these needs are met.
All people have a right to participate in the economic, political, and cultural
life of society. It is a fundamental demand of justice and a requirement for
human dignity that all people be assured a minimum level of participation in the
community. It is wrong for a person or a group to be excluded unfairly or to be
unable to participate in society.
We are one human family. Our responsibilities to each other cross national,
racial, economic and ideological differences. We are called to work globally for
justice. Authentic development must be fully human and integrated development.
It must respect and promote personal, social, economic, and political rights,
including the rights of nations and of peoples. It must avoid the extremists of
underdevelopment on the one hand, and "super-development" on the other.
Accumulating material goods, and technical resources will be unsatisfactory and
debasing if there is no respect for the moral, cultural, and spiritual
dimensions of the person.
The Scandalous Realities of
There are 123 developing countries, 44 least developed countries, 25 Central and
East Europe and Commonwealth of Independent States (CIS) and 30 OECD Countries
in the world. According to WB Report 2003, there are 54 countries with high GNP
per capita of $ 9,386 or more; 37 upper middle-income countries ($ $ 3,036 to
9,385); 56 lower middle-income countries ($766 to 3,035) and 61 low-income
countries with $ 765 or less. The proportion of people living below poverty line
in the world is reported to have fallen from 29 per cent in 1990 to 23 percent
The richest 5 per cent of the world’s people have incomes 114 times those of the
poorest 5 per cent. The USA, Canada, Brazil, Mexico and Argentina have 95 per
cent of the combined GDP of the 35 Countries of Americas. There are built-in
inequities, not only in income, but also in the capacity and strength to deal
with global issues like trade. Seven countries, - US, Japan, UK, France, Saudi
Arabia, Germany and the Russian Federation, hold 48 per cent of the voting power
at the IMF, and 46 per cent at the World Bank.
In the evolution of the world economy, there are some countries less favored. In
these poor or “developing” countries, the vast majority of people live in
inhuman conditions, inimical to human dignity, a scandalous situation rejected
by the conscience of every human person. They feel ostracized from the world
community. They are also the losers in the battle for survival. What is it that
prevents development in developing countries? Why is it that so many developing
countries have a per capita income much lower than that in advanced countries?
Joel Mokyr [xxvii] in his outstanding essay asks a major historical question:
“Why Was the Industrial Revolution a European Phenomenon? He says that many of
the inventive periods that characterized the Industrial Revolution showed up
much earlier in China and other countries, yet they did not trigger any
important changes in their economies. Mokyr proposes that they lacked an
“epistemic base” – a broad set of empirical and theoretical knowledge – in which
to embed their discoveries. The failure of many development schemes in poor
countries may thus be attributed to their attempt to insert some advanced
technology in societies lacking the base of knowledge that allows them to apply
it to apparently unrelated processes.
According to the UNDP Human Development Report, the gap between the incomes of
the richest countries and the poorest countries was about 3 to 1 in 1920, 35 to
1 in 1950, 45 to 1 in 1975, 75 to 1 in 1992 and it is almost 100 to 1 now.
Global inequalities in income have increased alarmingly in the last hundred
years. More than 30,000 children die everyday from preventable diseases. Some
120 million children are excluded from primary education. About 500 million
women are illiterate. 1.5 billion People have no safe drinking water. One woman
dies for every 260 live births – which is one woman in a minute. More than 20
million have died of AIDS, 34 million people are living with HIV/AIDS, and
everyday 15,000 are infected. About 790 million people are hungry and 1.2
billion live on less than one dollar a day. [xxviii]
Between 1945 and 2002, 171 wars (excluding the recent attack of USA on Iraq)
have been fought in the world resulting in a human loss of 28.6 million persons.
The Korean War caused 3 million deaths, the Vietnam and Afghanistan wars 2
million deaths each, Sudan war 1.5 million deaths, Rwanda war 0.8 million
deaths. Almost all these Wars were fought in the third world.
We are living in a very challenging environment. Of the 6 billion people living
on the planet earth today, 4.9 billion, i.e. 80 percent of the world population,
live in the developing countries. These 4.9 billion receive only around $ 6
trillion, i.e. 20 per cent of global GNP. Imagine the demography of the next 25
years: about 2 billion will be added to the planet of which 95 per cent will be
in the developing world. Besides the critical global problem of poverty, the
demographic disequilibrium is another challenge to be faced now.
[xxix] The UN
Population Division has projected that global population will increase to 9.3
billion by 1050. The less-developed regions will add 3.2 billion (going from 4.9
to 8.1 billion) by 2050 – the same number as were added between 1950 (when there
were only 1.7 billion) and 2000.
Soviet Union as low-trust and less-honest economy
Let us take Soviet Union as an example for low-trust and less honest economy.
According to a study of Susan Rose Ackerman and Bo Rothstein
[xxx], under Soviet
style of socialism, government institutions had become severely discredited
among the population. Dishonest behaviour towards them was often seen as
acceptable and even praiseworthy in the face of their legitimate power. In
general, trust relationships extended little beyond the circle of family and
close friends. Their study confirms that countries in transition from socialism
face particular problems in developing habits of trust and honesty. They
highlight the tensions between interpersonal trust and trust in public
Vadim Radaev’s [xxxi] study of Russia shows that Market relations were not
confined to free competition and price-making mechanism. Market was a part of
the economy as instituted process. [xxxii] It was constituted by sets of rules,
regulations, and other institutional arrangements, including relations of trust.
Russia demonstrated a prominent example of a low-trust society. Formal rules
were contradictory and unstable here. There was a lack of their formal
enforcement, which produced a high level of uncertainty. The state legislative
and regulatory policy was non-predictable by the market actors. As a result,
one-sided trust in institutions remained on the low level.
Formal rules were contradictory and changeable there. They became subject to
intensive informalization. The state policy was often non-transparent and
non-predictable, and therefore, became a major source of institutional
instability. This situation produced uncertainty and undermines one-sided trust
in formal institutions. Reciprocal trust in the other market actors was also
seriously undermined for honesty often did not pay there. Entrepreneurs
confronted with a high level of opportunism and malfeasance in business
relationships coming from the frequent infringement of business contracts.
India as a Case for
British colonization of India has been a major cause for India’s
underdevelopment. While comparing the economic outcomes across areas in India,
which were under the direct colonial rule of British administrators with areas,
which were under indirect colonial rule, Lakshmi Iyer [xxxiii] says that “ I
find evidence that colonial annexation policy was highly selective and
concentrated on areas with high agricultural potential. The instrumental
variable estimates show that areas under direct British significantly lag behind
in public goods provision even as late as forty years after the end of colonial
With a total population of 1.027 billion persons, which is 16 per cent of the
world’s population; with 1/3 of world’s poor; 27.1 per cent below the poverty
line; with a per capita income of US$ 2,500, which is 1/13 of the developed
countries; ranking 124th in the human development index, India faces, besides
economic and political instability, ethnic and communal outbursts which have
proved fatal to its development. According to Transparency International (TI)
survey (2002) [xxxiv], India stands out as one among the 30 most corrupt
countries in the world. TI gives India an integrity score of meagre 2.7 out of
clean 10. TI has also found out that Indians pay a whopping Rs. 267 billion in
bribes annually with the health sector perceived to be the most corrupt with
people being made to pay for what they are entitled to.
Equally surprising is education at the number two position. Corruption has
corroded the two key areas of development. Health and education are the two
sectors, which are, and ought to be, the undisputed engines of higher growth.
There are no two opinions on the liberal allocations made in Plan after Plan for
these vital sectors. But if the money is mis-spent, it is a national loss. It
slows down progress and harms collective well-being.
Corruption in governance is the root cause of many evils today resulting in slow
development. It brings down the quality of governance. A survey of seven
government departments conducted in 2002 in five metros [xxxv] in India rated
Delhi’s Customs and Excise Department, scoring 8.6 on a scale of 10, the most
corrupt. [xxxvi] As Frederick Keith Ross has said, ‘Corruption is a sin; every
government denounces it and every government practices it.’
Politicians, bureaucrats and governments in India are involved in scams and
scandals. 1990s has been a decade of scams [xxxvii] – the Bofors, the Bank
Securities scam, the Hawala scam, the Animal Husbandry scam, the Sugar scam,
Telecom scam, Fertilizer import scam, PSE disinvestment scam etc. Indian
governments, Centre and States, are full of scandals and corruption charges
involving those who occupy top political positions. Corruption manifests itself
in many forms: at the highest political level as horse-trading of MLAs and MPs;
at the fiscal level in the form of evading taxes; at the corporate level in
terms of financing elections by black money and so on.
As Ruddar Datt puts it, [xxxviii] “A strong feeling has grown in Indian
political life that corruption has become a way of life. In case, you are caught
taking a bribe; you can get rid of the crime by paying a bribe”. Bribe has
become an incentive these days, which increases work efficiency in public
offices. It is disturbing to note that corruption has brought India among the
lowest in the list of countries of the world in the matter of prevalence of
corrupt activities. Today government is being gradually transformed into a
company/a business enterprise. Can governance become a business? Indian
political system as well as the judicial system needs reforms.
A few years ago, John Major, ex-British Prime Minister appointed a committee
under the leadership of British lawyer, Lord Nolan to draw up a Charter of
Governance in public life. This committee drew up seven principles under the
Selflessness in service;
Integrity in life;
Leadership. These are basic human values
meant to build communities towards progress for all. Higher degree of these
values being observed in a country will create better working environment for
greater investment and productive activity.
Policies and planning are not people-oriented and so, not focused on growth and
development. If countries like India have to reach the level of developed
countries in GDP, NNP and per capita income, mode of governance at various
levels needs to improve. Trust, honesty and transparency must become the guiding
principles of all projects and programmes of development. A well-known
economist, Kirit Parikh [xxxix] has projected that India could have a per capita
income of US$ 30,000 by the year 2047. And an American professor in Business
management, A. J. Rosensweig [xl] has said that India’s GDP would exceed that of
Japan by the year 2025 and that India would be the third largest economy in the
world (behind USA and China). Their projections could become a reality only if
there is greater level of trust and honesty among leaders and business
India – 70 per cent of its population – lives in villages. It is
multi-religious, multicultural and multi-linguistic. It is known to be a cradle
of all religions. India has had a long tradition of religious tolerance. It
professes secularism as per its Constitution. Secularism means an attitude of
equal respect for all religions. Unlike in the West, where secularism came
mainly out of the conflict between the Church and the State, secularism [xli] in
India was conceived as a system, which sustained religious and cultural
pluralism. Secularism as understood in Indian politics today means
Take an Indian village; people of different religions and castes have lived
together for centuries in harmony and peace. But, of late, particularly since
independence, communal clashes are common, costing hundreds of human lives and
huge destruction of wealth and property. Godhra Massacre of February 2002 in
Gujarat where nearly 2000 people, mostly Muslims including women and children,
were murdered is a recent case in this regard. [xlii]
While religious pluralism
is strength on the one hand, it is also a bane to India’s development. The two
major religions namely Hinduism and Islam are often at war with each other.
Frequent communal clashes keep the environment disturbed with fear and suspicion
and reduce the degree of incentives to invest and potential for productive
activity. Communal violence is a major hurdle to India’s progress.
Hinduism is not an organized religion. “Hinduism does not rest on the authority
of one book or one prophet, nor does it possess a common creed.”
distinguishing characteristics are its diversity and multiplicity. It is not a
missionary religion like Christianity. As Jawaharlal Nehru put it, “Hinduism, as
a faith, is vague, amorphous, many-sided, all things to all men. It is hardly
possible to define it, or indeed to say definitely whether it is a religion or
not, in the usual sense of the word.” [xliv] As an unorganized religion, it has
not vibrantly contributed to India’s scientific and industrial knowledge and
Factors for Underdevelopment
With the foreign debt and the iron rules of the world market against them, the
noose around their neck is threatening to strangle the poor countries. They
confirm the explanation that these inequalities are caused by a type of
relationship, which often has been imposed upon them. The poor countries are
convinced that the present status of the rich countries is the outcome of
injustice and coercion (colonial economics). Their level of expectations, though
somewhat indistinct, goes far beyond a mere imitation of the rich countries
(dependency model). They are attempting to overcome material poverty and misery
in order to achieve a more just and human society. But their internal diversity
and heterogeneity, and the presence of external determinants contribute to the
rise of different needs in different groups causing a dynamics of conflictual
As Joseph Stiglitz says, [xlv] we are coming to recognize that lack of
development is often due to failures of collective action. The problem is not
just predatory states but states failing to provide the institutional
infrastructure required for a sound economy. It is important that the state
undertakes its responsibilities and does so effectively and efficiently. The
state, besides ensuring that it performs its own functions well, also has a role
to monitor other institutions in a country. The institutional arrangement in a
society must be efficiency enhancing, not power and wealth preserving.
A global economy has emerged, but the institutions of global governance are not
performing either efficiently or equitably. The Bretton Wood Institutions (IMF,
World Bank, GATT/WTO) were created to serve as global institutions for
maintaining financial stability and for promoting development and trade. But the
impact of policy condition of these institutions falls disproportionately on the
Development, in recent years, has been taken as synonymous with modernization,
westernization and reformism. Development strategies promoted by international
organizations have been closely linked to governments and groups, domestic and
foreign, which control world economy. The rich countries projected themselves as
models of development and their approach did not attack the root causes of
misery and hunger. Their models have been timid and really ineffective in
achieving the desired transformation. Great care has been exercised to protect
their vested interests. As Jan Nederveen Pieterse observes, “modernization or
catching up with advanced countries, is no longer an obvious ambition. Modernity
no longer seems so attractive in view of ecological problems, the consequences
of technological change and many other problems. Westernization no longer seems
attractive in a time of revaluation of local culture and cultural diversity.”
As Stiglitz puts it: “Anyone visiting a typical developing country could not but
be struck by the huge inequalities in living standards. While a few enjoy a life
of wealth and luxury, millions live subsistence lives in poverty. In some
countries this disparity is a consequence of a feudal heritage; in many it is
part of the colonial inheritance, a result, for instance, of European colonial
masters appropriating vast amounts of land, leaving others only the residual.”
[xlvii] Across the third world, gross inequalities persist and deepen. More of
the world’s poor are crowded into more hopeless condition. Yet, the earth’s
plenty is far from running out. In nation after nation, a tiny minority of the
rich holds vast areas of land and wealth.
Take the social and political contrasts presented by the two arms of the
American hemisphere. While the USA in the north enjoys a dynamic economy within
a powerful democracy, the numerous countries in Latin America in the south are
politically divided, economically underdeveloped, subject to frequent social
unrest, and plagued by inflation and poverty. Why should one branch of the
continent enjoy enormous affluence and power, while the other languishes in
misery and unrest when both attained independence almost simultaneously, and are
endowed with a comparable abundance of natural and human resources?
Many economists believe that the underdevelopment of the “developing” countries
is only the by-product of the development of “developed” countries. It is the
consequence of their total dependence on rich countries. Colonization of Asian
countries by European countries has been a major cause for Asia’s
underdevelopment. Only Japan and the Kingdom of Siam (modern Thailand) escaped
Asia, though economically developing, is steeped in a sense of the sacred. We
sense a cosmic worldview to life with rich cultural diversity expressed in art,
architecture, music, and the rich classical and folk traditions. But modern
media, IT and globalisation-liberalisation forces are posing a threat to the
much-desired Asian development. The glaring reality of the vast multitude of
poor, the varied deprivation and dehumanization, rampant corruption and
injustice and the inevitable exclusion of the displaced, untouchables, women,
indigenous and migrant communities confront Asia. The exploitation of our
eco-systems further aggravates the plight of the poor. [xlviii]
Before 1800, “Asia was the world’s main production and profit generating area.
With 66 per cent of world’s population, it accounted in 1750 for almost 80 per
cent of wealth produced in the world. China and India were the two great regions
most central to the world economy. India and China together accounted for 57.3%
of world manufacturing output. Asia was particularly dominant in finished
textile products (Indian and Chinese cotton and silk goods) - a sector later to
become the globalized flagship industry of the European industrial revolution.
Trade-flows between Chinese, Indians, Japanese, Siamese, Javanese and Arabs were
much greater than those within Europe. The level of scientific and technical
knowledge was high - more so in many fields than that of Europe. India’s
competitiveness was explained by its relative and absolute productivity in
textiles, by its domination of the world market in cotton goods; that of China
by its even greater productivity in industry and agriculture, and in river
transport and trade.
European global domination led to the de-industrialization of Asia: that is the
disappearance; almost total in India and partial in China, of Asian craft
industries. Asian de-industrialization was due to the combined effect of two
factors. First, Europe had now acquired a decisive lead in technology:
mechanization brought major increases in productivity, resulting in an explosive
growth of manufactured goods with lowered production costs. Second, the unequal
terms of trade and commerce that the colonial home countries imposed by force:
competition from European manufactured goods on the Indian and Chinese markets
took place in a context of free trade that was anything but free, since the
colonies were compelled to open their borders unilaterally to European products
without any quid pro quo.
This process is what led to the creation of the third world and the
ever-widening divide during the 19th century between the colonies and their
colonizers. Asian decline in comparison with Europe was not only relative but
also absolute: in 1860 the standard of living in the colonies was lower than in
1800 owing to European expansionism.
But the transformation that is taking place today in China, also in India
disproves the deep - rooted western ethnocentric views that the cultural factors
will forever prevent the east (far, near or middle) from attaining modernity,
which has been thought of as uniquely western since the European industrial
revolution. Indeed, the scale of China’s transformation has provoked questioning
and concern in the West about a possible realignment of the world economy
towards Asia and, in the longer-run, a fundamental shift in major international
equilibrium. Adam Smith’s prediction in 1750 that China and India would emerge
as economic powers in the 21st century is coming true, though the transformation
process is slow in India. “The West has long been accustomed to consider itself
the thinking subject of other peoples’ history. It must now rethink its own
history and its rise, no longer exceptional but as a circumscribed moment in
world history.” [l]
Where there is absence of trust, honesty and respect for fellow human beings,
there is greater degree of corruption. According to a review of Eric Chetwynd,
Frances Chetwynd and Bertram Spector [li], Corruption in the public sector - the
misuse of public office for private gain - is often viewed as exacerbating
conditions of poverty (low income, poor health and education status,
vulnerability to shocks and other characteristics) in countries already
struggling with the strains of economic growth and democratic transition.
Alternatively, countries experiencing chronic poverty are seen as natural
breeding grounds for systemic corruption due to social and income inequalities
and perverse economic incentives. It is concluded that corruption, by itself,
does not produce poverty.
In his recently published book on public corruption, Robert Neld
[lii] recalls a
meeting with the famous Swedish economist and Nobel Laureate Gunnar Myrdal in
the late 1960s. Myrdal’s argument was that western intellectuals often viewed
corruption as the exception from normality. But according to Myrdal,
view was a mistake: from a global and historical perspective, non-corruption was
to be seen as the exception. Neld follows Myrdal’s argument and points out that
non-corruption came pretty late in history to a small number of countries in a
particular corner of the world. It should be added that Myrdal, in his analysis
of poverty in Asia, invented the concept of the soft state as early as the 1960s
to shed light on the problem nowadays known as quality of government.
Corruption has direct consequences on economic and governance factors,
intermediaries that in turn produce poverty. Thus, the relationship examined by
researchers is an indirect one. Their review discusses two major models
explaining this moderated linkage between corruption and poverty: an economic
model and a governance model.
The Economic Model [liv] postulates that corruption affects poverty by first
impacting economic growth factors, which, in turn, impact poverty levels.
Economic theory and empirical evidence both demonstrate that there is a direct
causal link between corruption and economic growth. Corruption impedes economic
growth by discouraging foreign and domestic investment, taxing and dampening
entrepreneurship, lowering the quality of public infrastructure, decreasing tax
revenues, diverting public talent into rent-seeking, and distorting the
composition of public expenditure. In addition to limiting economic growth,
there is evidence that corruption also exacerbates income inequality; regression
analysis has shown a positive correlation between corruption and income
The Governance Model [lv] asserts that corruption affects poverty by influencing
governance factors, which, in turn, impact poverty levels. First, corruption
reduces governance capacity, that is, it weakens political institutions and
citizen participation and leads to lower quality government services and
infrastructure. The poor suffer disproportionately from reduced public services.
When health and basic education expenditures are given lower priority, for
example, in favor of capital intensive programs that offer more opportunities
for high-level rent taking, lower income groups lose services on which they
depend. Secondly, impaired governance increases poverty by restricting economic
growth and, coming full circle, by its inability to control corruption. Thirdly,
corruption that reduces governance capacity also may inflict critical collateral
damage: reduced public trust in government institutions.
Many World Bank studies suggest that higher levels of corruption reduce growth
through decreased investment and output. One such comprehensive study [lvi]
looked at 22 transition countries and examined two forms of corruption – state
capture and administrative corruption – and their impact on selected economic
and social indicators. Kaufmann, Kraay and Zoido-Lobaton [lvii] have also
conducted a research on the relationship among corruption, governance and
poverty. Their studies suggest an association between good governance (with
control of corruption as an important component) and poverty alleviation. They
studied the effect of governance on per capita income in 173 countries, treating
“control of corruption” as one of the components of good governance. Analysis
showed a strong positive causal relationship running from improved governance to
better development outcomes as measured by per capita income.
Impact of Liberalization and
Today, globalization seems to have become a phenomenon of fear. It is said that
liberalization, privatization and globalization (LPG policy) are the rich
nations’ millennium strategies floated through multilateral institutions to
systematically oppress the third world. Globalization is defined as declining
barriers to trade, migration, capital flows, technology transfers, and foreign
direct investment (FDI). It is the process of extending and integrating markets
and economies so that they are no longer confined to a single region or nations
but form part of a global economic system. While mainstream economists suggest
that globalization process is a strong force for equalizing per capita income
between nations, others say that the developing countries are exposed to threats
of further aggravation and marginalisation in the process.
Recent World Bank reports [lix] reveal that during the globalization period, the
distribution of per capita income between countries has become more unequal. For
example, in 1960 the average per capita GNP in the richest 20 countries was 15
times that of the poorest 20 countries. Today the gap has nearly tripled.
Emphasizing the multidimensional nature of poverty, the report says that the
poor face not only a chronic shortage of income but also a sense of voicelessness and powerlessness and a high level of economic insecurity. This
uneven record of development is rupturing human life and development process.
As Robert J. Samuelson [lx] puts it "…
Globalisation is a double-edged sword. It’s
a controversial process that assaults national sovereignty, erodes local culture
and tradition and threatens economic and social stability." Globalization has
raised fears all over the world, in the North and in the South that the market
forces could rend the social fabric of societies. “It brings instability and
unwelcome change… expose workers to competition from imports… undermines
governments…” [lxi] Anti-globalizationists proclaim, “The world is not for
sale”. Globalization is not being warmly welcomed. It has its gainers and
losers. It is said to be good for rich people and rich countries, but bad for
poor people particularly the indigenous communities like Tribals, Dalits and so
As Henry Kissinger, former US Secretary of State has said, “globalization
inevitably challenges prevailing social and cultural patterns… A sense of
political unease is inevitable – especially in the developing world – a feeling
of being at the mercy of forces neither the individual nor the government can
influence any longer”. [lxii] Though there are grounds for defending
globalization as Jagdish Bhagwati [lxiii]
does, there is substantial evidence
that implementation of LPG policies has worsened income distribution in many
developing countries, and as a result, long-term growth has been hampered and
poverty has increased. According to Human Development Report in South Asia
(2001), [lxiv] the number of poor people has increased and the poor are being
marginalized in South Asia. The levels of human development have started to
stagnate or even decline. “The globalization process in South Asia has focused
on integrating markets without improving the conditions of the vast majority of
South Asians. About half a million people have experienced a decline in their
Take the case of India. In the broad setting of LPG measures in many countries
in the 1980s, India was an apparent anomaly. India was facing a macroeconomic
crisis that required immediate attention. The crisis provided the opportunity
and the necessity to undertake a programme of macroeconomic stabilization and
structural adjustments in 1991 with the announcement of the New Industrial
Policy Resolution. From 1991 to 2000 was the period of first generation of
reforms in India. And from 2000 the second generation began. “This was the
period when GDP growth increased to around 6.9 per cent per annum, the highest
ever, witnessed consecutively for four years in India.” [lxv] A situation of an
inverse relationship between poverty reduction and GDP growth was observed.
According to Gupta, [lxvi] the poverty reduction over 1983 to 1990-91 was around
3.1 per cent per annum, but it reversed to 1 per cent in the 1990s. This leads
us to a natural conclusion that the ‘trickle down effects’ of the growth process
did not benefit the poor. S. P. Gupta held that the reforms were pro-elitist
The number of poor in India remained stable at around 320 million for a fairly
long period (1983-1997), due to a countervailing growth in population. Y. V.
Reddy points out that over 1/3rd of the Indian population in 1997 could not have
the required minimum daily calorie intake, same as in 1990.
[lxvii] While Bhalla
[lxviii] argues that poverty fell far more rapidly in the 1990s than
previously, Sen [lxix] has observed that poverty reduction had been stalled and
that the poverty rate had even risen in the 1990s. Martin Ravallion’s study adds
that pre-1990s growth did reduce poverty, but in the 1990s, with higher growth,
there were signs that inequality had risen within and between states.
incidence of poverty which fell from 55.5 per cent in 1972 to 34.3 per cent in
1990 never went below the 1990 level during the reform period of 90s, while
Government of India measured it at 26 percent.
During this period, the rate of growth of employment dropped below 1 per cent p.
a., while it was 2.07 per cent in the 80s. In India nearly 90 per cent of
employment is in the informal (unorganized) sector, such as agriculture,
self-employed (60 per cent), and casual labour (30 per cent), many of whom are
poor. Over 70 per cent of the labour force in all sectors combined is either
illiterate or educated below the primary level. In the 60s and 70s, employment
growth in the organized manufacturing sector was determined by the growth of
employment in the public sector enterprises. But changes have been taking place
since the declaration of the NEP in 1991 and the growing importance given to the
private sector investment including investment from foreign countries in the
form of FDIs, etc.
The total employment in the public sector which was 19.06 million in 1991
decreased by 1.5 per cent to 18.77 million in 2001. Total workforce in the
Central PSEs was 2.18 million in 1991, which declined to 1.74 million in 2001, a
20 per cent decline (1.7 per cent p.a.). [lxxi] The growth rate in the public
sector slowed down from 1.52 per cent p.a. to 0.03 per cent p.a. during the
post-reform period. [lxxii] In the organized sector where the public sector
reform process was introduced, the annual rate of growth of employment was 0.60
per cent during the post reform period (1990-91 to 1999-00) as against 1.73 per
cent in the pre-reform period. Between March 31 2001 and March 31, 2002, 4,
20,000 employees have been thrown out of jobs in the public sector.
Another 4 million are likely to be shed during the 10th Five Year plan. [lxxiv]
One of the ways of reforms in India was disinvestment or privatisation of public
sector enterprises. There were 234 Central PSEs (111 were loss-incurring) with a
total capital employed of Rs 3,30,649 crore in 2001. Many PSEs were sold off to
private partners with the objective of raising revenues to meet the fiscal
deficits and to improve efficiency. The Government had followed a type of exit
policy of public sector. [lxxv] Till December 2004, 48 PSEs have been disinvested
out of which 14 have been strategic sales. Profit making entreprises like BALCO,
which are in the tribal belt, have been sold off. PSEs in the tribal belt were
beneficial to tribal people, giving them employment and livelihood.
Privatisation of these entreprises has adversely affected the tribal people and
disturbed the regional balance in terms of industrialization. The strategic
method has increased ownership concentration. All strategic partners are large
business houses like Tata, Sterlite. This calls for some rethinking on the
existing policy of disinvestment.
The new initiatives in terms of disinvestment have in fact added oil to the fire
of existing burden of unemployment. This is clear from the study
[lxxvi] of 14 PSEs, which have been strategically disinvested. The net reduction in these 14
enterprises was 4,719 workers. And the kind of employment the disinvested
industries may provide will not be for the 75 per cent of the labour force. The
employment growth in India is estimated to be around 2.3 per cent, while the
labour force is growing at the rate of 2.5 per cent annually. Plan achievements
have always fallen short of targets. The unemployment scene has continued to be
the same with more than 7 million every year, and around 18.5 million of
accumulated backlogs. The country is facing a challenge of not only absorbing
the fresh entrants but also clearing the backlogs.
Consumerism has become a culture today. It is said to be a byproduct of
capitalism in which identities are defined in terms of money, power and
materials. As Sulak Sivaraksa observes, "Young people define their identities
through perfumes, jeans and jewelry. The primary measure of a person's life is
how much money he or she has." According to Buddhism, there are three poisons:
greed, hatred and delusion. All three are manifestation of self-centeredness and
unhappiness. These poisons drive capitalism and consumerism. When Peter House,
an American pastor, was asked once about his religion, he answered that he was
raised a consumerist. Consumerism has permeated the western society in many
ways. ‘It is the religion of the west. The soul of the western society is deeply
committed to consumerism. Almost all, irrespective of age, creed, color or
religion, are loyal to this modern religion. Globalization measures of recent
years have also globalized consumerism. You see it in developing countries among
the rich and the middle class. There is a growing craze for consumerism. Raiders
of the global economy prey on even the third world poor.
In most countries of the world-if not all-women form disadvantaged section
vis-à-vis men. The globalisation of the economies has had an enormous impact on
women, their work and health in the developing countries. They are victims of
the neo-liberalism – ‘docile’, compliant’, ‘easy to manage’, and ‘difficult to
organize’. “...the contradictions women face have never been more bruising than
they are now... On every side speechless women endure endless hardship, grief
and pain in a world system that creates billions of losers for every handful of
winners. It's time to get angry again.” [lxxvii] Globalisation has had such
negative consequences for women and children that some commentators argue that 'globalisation
is a man' [lxxviii].
Individualism (to be different and to have more than others) and consumerism
have become the hallmarks of globalising world. In Many MNCs, employment has
been feminized for cheaper and more flexible source of labour.
Globalization-forces use the existing patriarchal ideology to make women more
subservient to male authority. A large portion of the women who work in the
manufacturing or services departments often have very long work days with few
breaks. The work environment is hazardous to their health and they are subjected
to violence and sexual harassment. MNCs are competing with one another to sell
their products to accumulate more surpluses for themselves.
Firms and individuals follow suit in their pursuit of materialism and the
creation of status symbols. In the same vain, sexuality and women’s bodies are
being commercialized as never before – from pornography, sex-tourism and sex
trafficking to advertisements and beauty schemes. Economic globalisation in the
form of ‘market democracy’ has also created an image of the New Asian Woman. She
is the professional woman, entrepreneur, manager and executive who is
articulate, glamorous and assertive. This image is in every women’s magazine,
avidly read by the middle class and aspiring working class women who don’t have
the means to buy your designer clothes and skin-whitening products. It is also
true that while women do suffer under neo-liberalism, women workers in the most
repressive situations have fought back, resisting the assaults of employers,
governments and the IMF.
Development paradigms in developing countries over the years have been external
or ‘foreign’ based on the model of the industrialized countries and promoted by
them for their own prolonged domination. As Serge has pointed out, “ the debate
over the word ‘development’ is not merely a question of words. Whether one likes
it or not, one can’t make development different from what it has been.
Development has been and still is the Westernization of the world.” Rajni
Kothari rightly says, ‘where colonialism left off, development took over.’ [lxxx]
In this context of global disparities on the one hand, and technological changes
and economic reforms, viz. liberalization, privatization and globalization on
the other, the issue of development needs rethinking. The conventional
understanding of development with the State as its agent is being overtaken by
market based approach floated by Bretton Wood institutions and donor countries.
There is an urgency to look back and take stock of development perspectives and
performance so far – accepting the failures as well as achievements. Rethinking
itself is an intrinsic part of the development process.
Conclusions and Suggestions
No economic system can perform as well as free markets in an atmosphere of
mistrust and dishonesty. An efficient market requires that parties to
transactions trust one another and trust that the information presented to them
is accurate. The largest, seemingly anonymous markets like America's stock
exchanges are excellent examples of the importance of trust supported by
third-party conformation. If stock analysts and everyday investors cannot be
confident that they are being given accurate figures regarding the financial
health and prospects of all the companies they are considering buying into, they
cannot make informed buying decisions. The result is simply gambling or, more
likely, an increasing reluctance to invest. The stock market will plummet and
investment will dry up, and without investment, there will be no capital
improvements, no research, and no prosperity.
Honesty and ethical behavior are not just goods relevant to Sunday morning and
the hereafter, they are critical to our economic well-being. We have become, to
a great extent, materialistic and consumeristic. We give importance to “having”
and not “being”. In being, we grow together, but in having, we perish together.
We increasingly are losing our understanding of just what it means to act fairly
and honestly. To be sure, we have a multitude of laws on the books that say, in
essence, "Thou shalt not lie." However, the very number and complexity of these
laws, applied in different ways to almost every aspect of economic life, have
blurred the basic point: Lies are evil. The very complexity of our laws has
encouraged many professionals and businesspeople to find ways of conducting
business that arguably fit within the letter of the law while avoiding its true
intent. We have become so tolerant of half-truths, hair-splitting definitions,
and the notion that truth is "subjective" that we have lost our ability to
enforce basic honesty and truthfulness, even where it is crucial to our economic
As trust and honesty - important elements of social capital - decline,
vulnerability of the poor increases as their economic productivity is affected.
When people perceive that the social system is untrustworthy and inequitable,
their incentive to engage in productive economic activities declines.
Anti-corruption programs that are formulated to address issues of economic
growth, income distribution, governance capacity, government services in health
and education, and public trust in government are likely to not only reduce
corruption, but improve development as well.
It is time we stopped talking and discussing about trust and ethics, and start
living it in our lives to bring changes in our organisations and companies. Our
life and business depend very much on personal relationships, which are at the
core of knowledge management. Trust and honesty are at the heart of the success
of these relationships. The relationship between values and economic development
though indirect is complimentary. An environment of trust and honesty creates a
conducive climate for investment and productive activities. Higher the degree of
trust and honesty, which results in strong human bond, smoother and higher will
be the process and level of development.
The present political process requires purification so that political will is
strengthened to take necessary action against forces that generate black money,
and sow the seeds of division, casteism, hatred and communal violence. There is
a need for transparency at all levels. India's legal and judicial systems are
highly sophisticated and well developed. Despite that, it has not kept pace with
the changing needs arising from increasing population, increase in number of
laws, increase in industrial activities and other changes resulting in
inordinate delays in disposal of cases. The present judicial system does not
render speedy justice to people. A comprehensive review of the system is
Democracy is a communications-intensive mode of governance in which individuals
play a more direct role through “the power of citizen-to-citizen communications”
which benefits both themselves and their community. A successful society is one
that gives opportunities to its citizens and promotes its capacities in equality
so that citizens think freely, work, grow and develop. The contentment of
citizens is closely linked to the level of political and social empowerment they
have. Where citizens control the agenda, stability and contentment is enhanced.
[lxxxi] Even though we have made some progress, government system and
administrative functioning have many weaknesses and inadequacies which are
proving quite a handicap in providing satisfactory delivery of services to
Governance system at various levels must improve. What we urgently require are
accountability, transparency and an environment of trust at all levels.
Governments should introduce measures for making governance more effective and
hassle-free. In order for globalization to bear a “human face”, we need to
foster a major democratic participation not only at the local level but also at
world level, in international institutions and multilateral organizations. We
want a better world, a more peaceful world. It cannot be based on hegemony, in
the balance of powers or in persuasion, but it has to be based on dialogue and
cooperation, human dignity and justice.
There is an urgent need for a global spirituality that considers persons as
subjects and not objects of history. A spirituality that considers men and women
as sacred, unique, irreplaceable and irreducible human beings, free by nature
and called to transcendence. A spirituality that is human and acceptable to all
religions. It should recognize the cultural diversity, the uniqueness of
national and local cultures and heritage. Steeped in the sense of the sacred, it
should take a holistic approach to life that life is sacred and that all beings
journey towards the cosmic unity. Spirituality plays a major role in building
human communities based on peace and harmony.
Spirituality liberates and empowers through a sense of shared purpose. Such a
sense of purpose is a pre-requisite for a national unity and social cohesion. To
lack a shared sense of purpose is to invite drift and division. Spirituality,
with its regenerating power, holds the promise of a new beginning. Optimization
of the wholeness of humanity with a special focus on human development and
well-being is the quintessential spiritual purpose. [lxxxii] It is spirituality
that sustains development in society. It is the soul of all human actions. It is
a powerful tool, which could bring religions together to fight against the
dangers of globalization: materialism, egocentrism, consumerism, and destruction
of the environment and the crises of family and neighborhood ties. Our efforts
to correct the ill effects of neo-liberalism and globalization depend on
spirituality that gives us inner strength. In the absence of such spirituality,
development becomes a mere material advancement based on greed and avarice.
Earth is one. And all of us have a vocation to maintain this cosmic unity.
[i] Mill John Stuart (1848),
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[ii] Josephson Institute of Ethics (2002), Making Ethical Decisions,
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[xxxv] Bangalore and Hyderabad are the fourth and fifth metros. Bangalore was
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[xxxvi] Manorama Year Book 2003, p. 547
[xxxvii] Rathi Mahendar, “Major Economic Scams in India”,
[xxxviii] Datt Ruddar, Economic Reforms in India, p. 304.
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[xli] Mahatma Gandhi had once said,
"I swear by my religion, I will die for it. But it is
my personal affair. The State has nothing to do with it. The State would look
after your secular welfare, health, communications, foreign relations, currency
and so on, but not your or my religion. That is everybody's personal concern!"
[xlii] Chenoy Mitra Kamal and others, “Genocide in Gujarat”, Report by SAHMAT
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* Professor and Former Head, Rabindra Bharati University, Kolkata, India.
** Professor and Vice Principal, St. Xavier’s College, Kolkata, India.