Download Economic Colonialism: The New Empire Building of the 21st Century

Economic Colonialism:
Blaine
Chair,
Prince
The
New
of the 21st
Century
Empire
Building
T.
Garfolo,
PhD
COBA
Academic
Research
Mohammad Bin
Fahd University
[email protected]
+966 5 354 859 09
Barbara L’Huillier, PhD
Coordinator of the COBA – Female Campus
Associate Chair Department of Accounting and Finance
Prince Mohammad Bin Fahd University
[email protected]
+966 5 049 552 59
Abstract
Colonization for the most part was motivated by economics as European powers sought to expand
their markets and acquire raw materials overseas. After World War II, colonial systems were
dismantled in a process referred to as ‘decolonization’, when the European powers determined that
the benefits of maintaining colonies were not worth the costs. But have we really decolonized or have
we substituted one style of colonization control for another?
Today, the term ‘neocolonialism’ refers to the practice of using capitalism, globalization, and cultural
forces to control a country in lieu of direct military or political control whereby neocolonialism is
motivated solely by economics. Corporations and nations seek to achieve favorable overseas
economic policies by pinning loans to particular actions on the part of a developing country. This is
accomplished through the implementation of the dependency principle.
The lending practices of the World Trade Organization (WTO) and the International Monetary Fund
(IMF) are two examples of international lending agencies using their economic clout to ensure certain
actions and policy decisions are agreed to by vulnerable third world countries. However, these actions
and policies are instigated to ultimately benefit wealthy western interests to the detriment of the
borrowing parties as both organizations act as agents of neocolonialism.
From a humanistic
standpoint, both agencies will lend money to developing nations. However, to receive the funds,
these sovereign nations must accept a list of terms and conditions that generally advance the ideals
and economic norms of these organizations. There is really no choice in accepting this “stringsattached” economic aid from the developing nation’s point of view - the people eat or they starve.
This represents a clear example of the dependency principle and ultimately, neocolonialism in action.
One of the negative side effects of Neocolonialism is a loss of identity. One of the driving forces
behind today’s neocolonialism is the interconnection between nations. In these new alliances, all
your threats (economic and cultural) and opportunities increasing flow from ‘whom’ you are
connected to further deepening the dependency. Berger (2011, interview) stated it best when he said,
“the negative side to globalization is that it wipes out entire economic systems and in doing so wipes
out the accompanying culture”.
In this paper, we examine the evidence that points to the inescapable conclusion of what
neocolonialism really is - economic colonialism in disguise. The evidence will show that there is no
difference between early European colonialism, which used direct military or political control to take
over a nation to advance their economic expansion and today’s neocolonialism that uses funding
agencies, multinational corporations, globalization, capitalism and cultural forces to accomplish the
same outcome. Complicit in the propagation of neocolonialism are business schools around the world
who repackage and market this devastating philosophy and making it a required course for every
entering class and calling it “Globalization: Introduction to a Global Market Economy”.
Keywords: neocolonialism, economic colonialism, cultural destruction, globalization,
capitalism, dependency principle
Introduction
Colonization for the most part was motivated by economics as European powers sought to expand
their markets and acquire raw materials from overseas developing countries. After World War II,
colonial systems were dismantled in a process referred to as ‘decolonization’ whereby European
powers determined that the benefit of maintaining colonies were not worth the cost. But, the question
raised in this paper is: have we really decolonized or have we substituted one style of colonization
control for another?
Today, we have come to accept that the term neocolonialism refers to the practice of using capitalism,
globalization, and cultural forces to control a country in lieu of direct military or political control and
is motivated solely by economics. Corporations and nations seek to achieve favorable economic
policies overseas by providing loans that are conditional based upon actions needing to be taken by
the developing countries. This is accomplished through the implementation of the dependency
principle.
Under the dependency principle, post-colonial countries have no choice but to accept Western
conditions for loans, as they desperately need the money to support their own domestic agenda.
Compliance is not a choice for these countries and in fact, this policy of neocolonialism promotes the
failure of governments and other public institutions, as they are not able to distance themselves
adequately from outside markets and influences.
When it comes to the point of getting an
international loan they either accept the terms and conditions attached to the loan or, in many cases,
the people will go hungry.
Through the dependency principle, impoverished nations remain impoverished. They are integrated
into the ‘world system’ and continue to enrich the wealthier developed nations. This situation
exemplifies the Parent-State colony dependency model. Examples of this can be found in the lending
practices of the World Trade Organization (WTO) and the International Monetary Fund (IMF) both
of which act as agents of neocolonialism. From a humanistic standpoint, both agencies will lend
money to developing nations. However, to receive the funds, these sovereign nations must accept a
list of terms and conditions that generally advance the ideals and economic norms of these
organizations. This is a clear example of the dependency principle and ultimately neocolonialism in
action as there really is no choice in accepting this ‘strings-attached’ economic aid from the
developing nation’s point of view.
One of the negative side effects of neocolonialism is loss of cultural identity. One of the driving
forces behind today’s neocolonialism is the interconnection between nations. In this new alliance, all
your threats (economic and cultural) and opportunities increasingly flow from ‘whom’ you are
connected to further deepening the dependency. We concur with Berger (2011, Interview) who stated,
“the negative side to globalization is that it wipes out entire economic systems and in doing so wipes
out the accompanying culture”.
Business schools around the world are complicit in promoting this devastating global philosophy of
economic colonialism as we teach our graduates how to most effectively ‘work’ the global markets
for the benefit of the wealthy and powerful. When we teach these concepts and techniques we are, in
actuality, instructing our graduates on how to disrupt economic systems and its accompanying culture
in developing nations in the process of trying to interconnect and globalize. If we look at governments
around the world today we can see that a market economy can be obtained without a democratic form
of economic and political governance being in place. However, in order for true democratic ideals to
flourish it needs, as one of its cornerstones, strong market forces to be present whereby each party
comes to the bargaining table as equals; something not present with the current form of economic
colonialism (globalization).
We accept that management for good human outcomes is a controversial ideal. We seek to contribute
to the enlargement of our collective critical awareness when we ask, how can the instruction in
techniques that foster economic colonialism be considered helpful, moving forward and beneficial to
all parties?
The State of the World: Decolonized or Neo-Colonial?
The current accepted definition of colonialism is that it is a set of social, political and economic
circumstances starting with the invasion of a country by a soon-to-be occupying force. The newly
occupied territory has its indigenous populations subjugated in order to claim territory and natural
resources. The indigenous economy is destroyed. As the conquering force represents the elite, the
subjugated indigenous people are forced to occupy the lowest rungs of the colonizer’s economy thus
becoming the country’s poor and unemployed. Indeed the indigenous population typically forms the
poorest segment of the ‘new’ society, and experiences the highest rates of hunger, malnutrition,
homelessness, unemployment, underemployment, and incarceration.
This disadvantaged and
disenfranchised segment of the population becomes little more than a cheap, disposable workforce
beholden to colonizers for any financial or social crumbs they choose to throw their way.
To deepen the disconnection from their past life, the newly conquered people are forced to assimilate
the cultural norms of their conquerors including dress, language and religion. This represents a total
disregard for the lives and essence of the people. It is extremely racial in its origin as it reeks of issues
of racial supremacy as the conquered are viewed as a ‘thing or asset’ or at best, a second-class human
being.
Colonialism slowly gave way to a newer form of control by a conquering people, that being
neocolonialism. With neocolonialism the major difference is in the ownership of the conquered
territory. Unlike colonialism where the expansion of territory was a primary concern, hence the
territorial takeover, neocolonialism is about subtle control. Control of the political structure is gained
through puppet governments, economic control and social integration into the cultural norms of the
neocolonialists. The easiest and most susceptible countries to neocolonial takeover are those
countries that have struggled to become disentangled from their previous colonial masters.
Do we learn from History?
From our perspective, it seems not – or at least not fast enough. New Zealand, a small democratic
nation in the Pacific, is a good case in point. The devastating effects of its rapid and radical opening
of the economy to ‘globalization’ left a trail of social distress in its wake, fastidiously documented as
it was occurring by Kelsey (2003, 1999, 1995). Helen Clark, then Prime Minister of New Zealand,
eventually acknowledged that this preoccupation with economic thinking came at the cost of all else
and left a legacy of high unemployment, surge in poverty, and sense of social exclusion. The era of
neo-liberalism had left New Zealand a divided society where many had little hope of success. The
destructive limitations of the de-spiritualized notions of western instrumentalism and economic
rationalism pervades through all of the government’s proclamations, often cloaked in a language of
concern about efficiency, effectiveness, productivity gains, growth and, yes, fairness. However, there
is nothing fair about marginalizing a culture and exploiting the resources of a nation in the name of
profitability.
Globalization
Today’s global society would like to claim that colonialism has almost ended, that we are now more
civilized and that such barbaric and supremacist attitudes no longer prevail. Unfortunately this is not
the case. Rather, is has been replaced with a new, more insidious and far-reaching form of
colonization.
It is economic colonization fostered and disseminated through global market
integration. Who are the new colonial powers - surprisingly not solely governments and nation
States? The primary colonizing power rests with large multi-national corporations formed after the
collapse of the economy of Eastern Europe which gave rise to the emerging economies of China and
India and international lending agencies originated established to assist impoverished nations achieve
economic independence.
The move toward a borderless world economy gave free access to
aggressive corporations to claim new economic territories.
Today’s economic model is money-centered and drives all development – the goal of which is to
bring consistently higher returns to investors. To this end, we mobilize and exploit all human and
natural resources to achieve this goal. The worker is viewed simply as a factor of production whose
cost is to be minimized in order to improve returns to the investor. This concept, this way of looking
at humanity and natural resources, economics, social and cultural norms, and business practices in
general, is nicely packaged and presented in a palatable way to the world and called Globalization.
The International Monetary Fund (IMF) (2005) describe globalization as “an ongoing process through
which an increasing flow of ideas, people, goods, services and capital lead to the integration of
economics and societies and results in significant changes to markets and businesses.”
The new
name for neocolonialism is the kinder and gentler word Globalization. If viewed for what it actually
is, then the mechanisms utilized by the economic world powers in the exploitation of people and
natural resources with respect to the under developed countries actually makes sense.
The Tool of Globalization: Economic Colonialism
Now we enter the age of subtle colonialism, economic colonialism that is currently flourishing in the
global market. However, the new colonial powers are not solely governments, but frequently are
corporations operating over multiple trading zones that do not appear to possess any national
allegiance. Rather there only allegiance appears to be to their shareholders with their insatiable
appetite for higher and higher returns on investment. Workers are simply the means, not the
beneficiaries of development. It is today’s money-centric economic model, previously discussed, that
drives these corporations to maximize their returns to their shareholders.
How are these new ‘economic colonies’ kept in line? We suggest that the weapon of choice is debt.
Globalization philosophy and practice uses debt to keep the ‘new colonies’ under control. One
example is odious debt, which is defined as “unjust debt that is incurred as rich countries loaned
dictators or other corrupt leaders when it was known that the money would be wasted.”
(http://www.globalissues.org/issue/28/third-world-debt-undermines-development). Loaning money
out in this fashion serves the economic colonial powers in two ways.
1. They use the debt to keep the nation(s) under their control.
2. They make excessive profits resulting from the high interest rates attached to this debt.
Historically, injustice has always been present with respect to the lending practices of developed vs.
developing nations. Currently, many third world countries are being forced to pay back debt at rates
“three to five times the level that Britain or Germany paid after World War II”
http://www.globalissues.org/issue/28/third-world-debt-undermines-development). After World War
II loans to the UK were at extremely low interest rates and the Allies cancelled almost all of
Germany’s debt. The intention was to allow these nations to rebuild after the war and to reclaim their
position in the world’s power structure. Conversely, to ensure dependency, the economic masters
take full control of the economy of developing countries under the guise of “economic liberalization”
utilizing ‘odious debt’ as show in the current lending practices to African States
(http://science.jrank.org/pages/7920/Neocolonialism.html). The International Monetary Fund (IMF)
is the tool currently being used in this process.
The International Monetary Fund (IMF) is an organization comprised of 185 member countries, which
has a 24-person Executive Board, made up of eight Executive Directors with the five largest
shareholders of the Fund being the US, Japan, Germany, France and the UK. It was founded to help
rebuild Europe in the wake of World War II and is the primary organization for providing loans to
countries facing financial crises.
Additionally, their stated purpose is in fostering economic
cooperation, growth and high employment, and promoting stability in exchange rates. The IMF
currently has an outstanding loan portfolio in excess of $28 billion to 74 countries.
One high profile case of IMF intervention is Jamaica. After the island nation’s economy crashed in
the early 1970s, the Prime Minister of Jamaica Michael Manley, crafted an initiative that “included
many elements of democratic socialism as it called for disengagement from international capitalism,
socializing the means of production and exchange, increasing Jamaica’s self-reliance, and
diversification of foreign economic relations” (Borrelli, 2002, speech).
The conservative People’s National Party was not pleased with this idea of “democratic socialism,”
and approached the IMF for economic aid (Persaud, 2001). This decision had unforeseen, extremely
detrimental, consequences for Jamaica. As is the norm for IMF loans to developing countries, several
terms and conditions had to be agreed to before receiving economic aid in the form of loans. In 1977
the Manley government had to agree to “pension and wage [cuts and] the removal of price controls”
(http://science.jrank.org/pages/7920/Neocolonialism.html). However, “the country’s entry into the
IMF ha[s] not alleviated Jamaica’s woes or freed its people from economic bondage” (Murrell, 1998,
p. 394). Borrelli (2002, speech) observed that “Thirty percent of the island’s workforce was
unemployed and the foreign exchange deficit was significantly higher than in 1977.” The freeze on
pensions and wages did not benefit the Jamaican people rather it allowed foreign corporations to
exploit a cheap labor force without regard for any minimum wage or labor laws. Clearly debt is the
whip now used to keep the economic slaves in line!
From the Local to the Global
Are lessons learned at the local level of ‘value’ in the global context? We invite consideration of the
perspective that scholars, in the academy of organizational studies, are implicated in the deaths of
millions as we contribute to the maintenance of ‘the world economy’ by providing generations of
functionaries who will administer the system. The Empire Builders, as described by Clegg and
Dunkerley (1980), are doing their job but with a built-in willingness to tolerate sacrifice and distress
of the most vulnerable (Humphries et al 2007; Humphries and Dyer 2005) – a willingness seen
globally as The Empire Builders rescue the bankers, and closes their eyes to the genocidal effects of
this system (Humphries 2007). Krugman (2009) suggests that the fundamental creed of fear and
greed is offered as an appeal to envy of the purported affluence of our global neighbors and thus to
harness our submission to its disciplines in ways that can only embed the injustices it purports to
address; indeed the darkest sides of globalization. Decolonization? Not until the deeply engrained
threads of neocolonization are identified and removed. Now that would be a challenge for those who
have in mind the decolonization of the life world as an aspiration for the 21st century!
Increasing Interdependence and the march to Homogeneity: The Key Result of Globalization
Globalization deals with global exports. Through globalization, we not only export goods to
countries, we also export the sellers’ culture and ethical norms to the recipient countries as well.
Consequently, one byproduct of globalization is observable ethical failure at the world level. With
respect to culture, let us examine the consequences of Globalization. Globalization, in general, breaks
down natural boundaries. Through the power of technology (television, internet, cinema) we are
instantly transported to far away lands. We are not hindered by boarders and can experience Chinese
food in India, Indian Curry in Vietnam and Vietnamese food in Ireland. This march towards a global
interconnectedness and its subsequent assimilation of culture, people, land and economics has its
roots in European colonialism. This is more visible in underdeveloped countries/economies with
respect to international trade as the less dependent countries economies are wholly dependent on their
economic masters. This interdependence results in each dependent on the other for their macroeconomic health. That is, globalization promotes the interdependence of countries’ economies,
cultures and ethics.
It is clear that globalization depends to a large extent on an unequal partnership between countries,
i.e. rich nations and poor nations. The so called power countries like USA, Japan, Germany, and
China have been at a distinct advantage in comparison to the lesser developed nations of the world.
Consequently, through globalization poor countries have stagnated in terms of economic growth
reflecting and resulting in: Low productivity, rising income inequality, poor standards of living,
unemployment, poverty due to inequality of income distribution.
The United Nations Conference on Environment Development (UNCED) (1992) declared that it was
their opinion that the only future the world has is to promote sustainable development. The world’s
representatives to this conference agreed to promote this goal. Unfortunately, not only do the key
actors in the global community continue on their unsustainable path, they also continue to sell the
dream of an unsustainable economy to others to facilitate the process of economic colonization. It is
the great irony of the international development agencies that they ‘say’ one thing and practice quite
another for in order to maintain the economic colonization polices of developing countries and multinational corporations, they choose to continue on their current path of promoting unsustainability.
Conclusion
The desire to become rich is intoxicating at best. The economic exploitation of developing countries
by the rich and powerful nations and corporation of this world is evidence to this. Developing
countries continue to dream that they too can become affluent like those countries found in the West.
This is at the heart of the ‘dream’ exported by the developed countries to the developing countries –
BUT it is only a dream!
Although the poorest countries in the world are yet to be fully integrated into the emergent global
market this has not stopped the negative impact of colonialism from being felt. Poor third world
countries are faced with increased marginalization in the global economy and poverty is on the
increase.
In the world of today, control of human and material resources is not done through forceful
domination of people through military subjugation. Rather, globalization remains the new form of
control and is spearheaded by international finance organizations aimed at consolidating a global
economic structure that very often has its head offices in New York, London, Tokyo, Paris, Frankfurt,
and other investment hubs across the world. The concept of neocolonialism is fast fading out of
fashion and newer, more sophisticated, yet more subtle movements are taking over, the most
important of which is Globalization.
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