The years of 1978-1980 as a revolutionary change in the global’s social, political and economic history. In that era “Neoliberalism” emerged a theory of political economic practices that come up with that human success could be advanced through liberating individual entrepreneurial freedoms and skills within an institutional setup attributed by strong private property rights, free markets, and free trade. It finds to bring all human practice into the domain of the market. The role of state has to protect these practices. And for that purpose state would stimulate the police, military and other legal institutions to ensure the safety of private property rights and free trade.
The primary try with neoliberal state origination happened in Chile after Pinochet’s coup in1973. The coup, in opposition to the democratically elected government of Salvador Allende, was supported by domestic trade elites endangered by Allende’s drive towards communism. It was sponsored by US corporations and US Secretary of State Henry Kissinger. It suppressed all the social movements and political organizations of the left. A bunch of economic specialists known as ‘the Chicago boys’ since of their connection to the neoliberal speculations of Milton Friedman, then teaching at the University of Chicago, was called to help reproduce the Chilean economy. The US had supported preparing of Chilean economists at the University of Chicago since the 1950s as part of a Cold War program to prevent left-wing propensities in Latin America. Chicago-trained economic specialists came to overwhelm at the private Catholic University in Santiago. Amid the early 1970s, trade elites formed their resistance to Allende through a bunch called ‘the Monday Club’ and created a working connection with these economic specialists, subsidizing their work through research institutes.
Pinochet took these economists into the government, where their first work was to arrange loans with the International Monetary Fund. It was not the US, moreover, that compelled Margaret Thatcher to require the spearheading neoliberal way she took in 1979.
Embedded liberalism is a term for the worldwide financial framework and the related worldwide political introduction as they existed from the conclusion of World War II to the 1970s. The framework was set up to bolster a combination of free trade with the opportunity for states to upgrade their arrangement of welfare and to control their economies to decrease unemployment. In that system, the state would have ownership on health, education, coal, steel and automobiles industries. Embedded liberalism conveyed high rates of financial growth in the progressed capitalist nations amid the 1950s and 1960s. Labour unions and political parties of the left had a really genuine impact inside the state apparatus. By the conclusion of the 1960s embedded liberalism started to break down, both globally and inside domestic economies. Signs of a genuine emergency of capital accumulation were all over apparent. Unemployment and expansion were both flowing everywhere, Financial emergencies of different states (Britain, for example, had to be safeguarded out by the IMF in 1975–6) come about as tax incomes plunged and social expenditures taken off. Keynesian policies were not working. The Bretton Woods framework of fixed trade rates sponsored by gold saves had fallen into disorganized. But when growth fallen down within the 1970s, when real interest rates went negative, then upper classes all over felt undermined. The coup in Chile and the military takeover in Argentina, supported internally by the dominant classes with US bolster, provided one kind of solution. Overall, neoliberalization was from the start a project to gain the restoration of class power.
The IMF and the World Bank from there on became centres for the proliferation and requirement of ‘free market fundamentalism’ and neoliberal universality. In return for debt rescheduling, obligated nations were required to implement institutional changes, such as cuts in welfare consumptions, more flexible work market laws, and privatization. Hence was ‘structural adjustment’ designed.
Margaret Thatcher, for example, assaulted a few of the settled in shapes of class control in Britain. She went against the aristocratic convention that dominated in the military, the judiciary, and the financial elite within the city of London and numerous sections of industry, and sided with the entrepreneurs and the dominant riches. She backed, and was usually backed by, this new class of business visionaries (such as Richard Branson, Master Hanson, and George Soros). How neoliberalism penetrated ‘common-sense’ understandings. The impact in many parts of the globe has progressively been to see it as a needed, even entirely ‘natural’, way for the social arrange to be regulated. Any political development that holds person liberty to be respected is defenseless to joining into the neoliberal fold. The around the world political changes of 1968, for case, were strongly arched with the crave for more prominent individual freedoms. This was certainly genuine for students, such as those enlivened by the Berkeley ‘free speech’ development of the 1960s or who took to the streets in Paris, Berlin, and Bangkok and were so savagely shot down in Mexico City shortly before the 1968 Olympic Games. They requested of the freedoms from parental, corporate, bureaucratic, and state limitations. But the 1968 development too had social justice as a essential political objective. Many political thinkers said that left movements failed to recognize or stand up to, let alone rise above, the inherent tension between the quest for individual freedoms and social justice.
This thought by comparing the neoliberal turns within the US and Britain in the crises a long time of the 1970s. This summed to a overthrow by the financial institutions against the democratically chosen government of Modern New York City, and it was every bit as successful as the military overthrow that had prior occurred in Chile. Riches was redistributed to the upper classes within the midst of a financial crises.
For instance, that Felix Rohatyn, the merchant banker who brokered the bargain between the city, the state, and the financial institutions, had the restoration of class power. The only way he could ‘save’ the city was by fulfilling the venture investors while degrading the standard of living of most Modern Yorkers. But the restoration of class control was nearly certainly what investment bankers like Walter Wriston had in mind. In the interim the venture financiers reconstructed the city economy around monetary activities,
Working-class and ethnic-immigrant New York was pushed back into the shadows, to be ruined by racism. In arrange to realize this objective, businesses required a political class instrument and a well known base. They in this manner effectively looked for to capture the Republican Party as their claim instrument. The Prominent universities such as Stanford and Harvard, liberally financed by corporation, got to be centers of neoliberal project.
In England, the Thatcher phenomenon would without a doubt not have emerged, let alone succeeded, in case it had not been for the serious crises of capital accumulation amid the 1970s.
In that financial crises, Labor government did not turn to IMF, but choose cutbacks in welfare state expenditures. Aftermath, the Labour government fell, and within the election that taken after Margaret Thatcher won a critical majority with a clear mandate from her middle-class supporters. Overall, neoliberal project consequences during Thatcher’s government brought inflation, unemployment and public institutions, nationalized industries were privatized. On other side, the Asian crisis of 1997– 8, for instance, was to bring developmental states more in line with framework of neoliberal practices. States like Taiwan and China that had not liberated up their capital markets exploited far less within the financial crisis of 1997–8. Brazil, Chile, Argentina, Mexico all faced financial crises under neoliberal policies.
Worldwide growth rates stood at 3.5 percent or so within the 1960s and even amid the crises of 1970s down-turned as it were to 2.4 percent. But that scarcely touches 1 per cent since 2000 demonstrate that neoliberalization has openly unable to support worldwide growth. As we can see the net worth of the 358 wealthiest individuals in 1996 was ‘equal to the combined income of the poorest 45 per cent of the world’s population 2.3 billion people’. In 2017 A Oxfam international revealed that eight men own the same wealth as the 3.6 billion people who make up the poorest half of humanity. In last neoliberal project cannot solve masses socioeconomic and political issues rather than it supports war economy projects in third world countries. It supports capitalism which destroying natural resources, animal species and which sucking poor labor’s blood.
How Bangladesh became Standout Star in South Asia Amidst Covid-19
Bangladesh, the shining model of development in South Asia, becomes everyone’s economic darling amidst Covid-19. The per capita income of Bangladesh in the fiscal year 2020-21 is higher than that of many neighbouring countries including India and Pakistan. Recently, Bangladesh has agreed to lend $200 million to debt-ridden Sri Lanka to bail out through currency swap. Bangladesh, once one of the most vulnerable economies, has now substantiated itself as the most successful economy of South Asia. How Bangladesh successfully managed Covid-19 and became top performing economy of South Asia?
In March 1971, Sheikh Mujibur Rahman declared their independence from richer and more powerful Pakistan. The country was born through war and famine. Shortly after the independence of Bangladesh, Henry Kissinger, then the U.S. national security advisor, derisively referred to the country as a “Basket Case of Misery.” But after fifty years, recently, Bangladesh’s Cabinet Secretary reported that per capita income has risen to $2,227. Pakistan’s per capita income, meanwhile, is $1,543. In 1971, Pakistan was 70% richer than Bangladesh; today, Bangladesh is 45% richer than Pakistan. Pakistani economist Abid Hasan, former World Bank Adviser, stated that “If Pakistan continues its dismal performance, it is in the realm of possibility that we could be seeking aid from Bangladesh in 2030,”. On the other hand, India, the economic superpower of South Asia, is also lagging behind Bangladesh in terms of per capita income worth of $1,947. This also elucidates that the economic decisions of Bangladesh are better than that of any other South Asian countries.
Bangladesh’s economic growth leans-on three pillars: exports competitiveness, social progress and fiscal prudence. Between 2011 and 2019, Bangladesh’s exports grew at 8.6% every year, compared to the world average of 0.4%. This godsend is substantially due to the country’s hard-hearted focus on products, such as apparel, in which it possesses a comparative advantage.
The variegated investment plans pursued by the Bangladesh government contributes to the escalation of the country’s per capita income. The government has attracted investments in education, health, connectivity and infrastructure both from home and abroad. As a long-term implication, investing in these sectors helped Bangladesh to facilitate space for businesses and created skilled manpower to run them swiftly. Meanwhile, the share of Bangladeshi women in the labor force has consistently grown, unlike in India and Pakistan, where it has decreased. And Bangladesh has maintained a public debt-to-GDP ratio between 30% and 40%. India and Pakistan will both emerge from the pandemic with public debt close to 90% of GDP.
Bangladesh’s economy and industry management strategy during Covid-19 is also worth mentioning here since the country till now has successfully protected its economy from impact of pandemic. At the outset of pandemic, lockdowns and restrictions hampered the country’s overall productivity for a while. To tackle the pandemic effect, Bangladesh introduced improvised monetary policy and fiscal stimuli to bring them under the safety net which lifted the situation from worsening. Government introduced stimulus package which is equivalent to 4.3 percent of total GDP and covers all necessary sectors such as industry, SMEs and agriculture. These packages are not only a one-time deal, new packages are also being announced in course of time. For instance, in January 2021, government announced two new packages for small and medium entrepreneurs and grass roots populations. Apart from economic interventions, the government also chose the path of targeted interventions. The government, after first wave, abandoned widespread lockdown and adopted the policy of targeted intervention which is found to be effective as it allows socio-economic activities to carry on under certain protocols and helps the industries to fight back against the pandemic effect.
Another pivotal key to success was the management of migrant labor force and keeping the domestic production active amidst the pandemic. According to KNOMAD report, amidst the Covid-19, Bangladesh’s remittance grew by 18.4 percent crossing 21 billion per annum inflow where many remittance dependent countries experienced negative growth rate. Because of the massive inflow of remittance, the Forex reserve of Bangladesh reached at 45.1 billion US dollar.
Bangladesh’s success in managing COVID19 and its economy has been reflected in a recent report “Bangladesh Development Update- Moving Forward: Connectivity and Logistics to strengthen Competitiveness,” published by World Bank. Bangladesh’s economy is showing nascent signs of recovery backed by a rebound in exports, strong remittance inflows, and the ongoing vaccination program. Through financial assistance to Sri Lanka and Covid relief aid to India, Bangladesh is showcasing its rise as an emerging superpower in South Asia. That is why Mihir Sharma, Director of Centre for Economy and Growth Programme at the Observer Research Foundation, wrote in an article at Bloomberg that, “Today, the country’s 160 million-plus people, packed into a fertile delta that’s more densely populated than the Vatican City, seem destined to be South Asia’s standout success”. Back in 2017, PwC (PricewaterhouseCoopers) report also predicted the same that Bangladesh will become the largest economy by 2030 and an economic powerhouse in South Asia. And this is how Bangladesh, a development paragon, offers lessons for the other struggling countries of world after 50 years of its independence.
Build Back Better World: An Alternative to the Belt and Road Initiative?
The G7 Summit is all the hype on the global diplomatic canvas. While the Biden-Putin talk is another awaited juncture of the Summit, the announcement of an initiative has wowed just as many whilst irked a few. The Group of Seven (G7) partners: the US, France, the UK, Canada, Italy, Japan, and Germany, launched a global infrastructure initiative to meet the colossal infrastructural needs of the low and middle-income countries. The Project – Build Back Better World (B3W) – is aimed to be a partnership between the most developed economies, namely the G7 members, to help narrow the estimated $40 trillion worth of infrastructure needed in the developing world. However, the project seems to be directed as a rival to China’s Belt and Road Initiative (BRI). Amidst sharp criticism posed against the People’s Republic during the Summit, the B3W initiative appears to be an alternative multi-lateral funding program to the BRI. Yet, the developing world is the least of the concerns for the optimistic model challenging the Asian giant.
While the B3W claims to be a highly cohesive initiative, the BRI has expanded beyond comprehension and would be extremely difficult to dethrone, even when some of the most lucrative economies of the world are joining heads to compete over the largely untapped potential of the region. Now let’s be fair and contest that neither the G7 nor China intends the welfare of the region over profiteering. However, China enjoys a headstart. The BRI was unveiled back in 2013 by president Xi Jinping. The initiative was projected as a transcontinental long-term policy and investment program aimed to consolidate infrastructural development and gear economic integration of the developing countries falling along the route of the historic Silk Road.
The highly sophisticated project is a long-envisioned dream of China’s Communist Party; operating on the premise of dominating the networks between the continents to establish unarguable sovereignty over the regional economic and policy decision-making. Referring to the official outline of the BRI issued by China’s National Development and Reform Commission (NDRC), the BRI drives to: “Promote the connectivity of Asian, European, and African continents and their adjacent seas, establish and strengthen partnerships among the countries along the Belt and Road [Silk Road], set up all-dimensional, multi-tiered and composite connectivity networks and realize diversified, independent, balanced, and sustainable development in these countries”. The excerpt clearly amplifies the thought process and the main agenda of the BRI. On the other hand, the B3W simply stands as a superfluous rival to an already outgrowing program.
Initially known as One Belt One Road (OBOR), the BRI has since expanded in the infrastructural niche of the region, primarily including emerging markets like Pakistan, Bangladesh, and Sri Lanka. The standout feature of the BRI has been the mutually inclusive nature of the projects, that is, the BRI has been commandeering projects in many of the rival countries in the region yet the initiative manages to keep the projects running in parallel without any interference or impediment. With a loose hold on the governance whilst giving a free hand to the political and social realities of each specific country, the BRI program presents a perfect opportunity to jump the bandwagon and obtain funding for development projects without undergoing scrutiny and complications. With such attractive nature of the BRI, the program has significantly grown over the past decade, now hosting 71 countries as partners in the initiative. The BRI currently represents a third of the world’s GDP and approximately two-thirds of the world’s entire population.
Similar to BRI, the B3W aims to congregate cross-national and regional cooperation between the countries involved whilst facilitating the implementation of large-scale projects in the developing world. However, unlike China, the G7 has an array of problems that seem to override the overly optimistic assumption of B3W being the alternate stream to the BRI.
One major contention in the B3W model is the facile assumption that all 7 democracies have an identical policy with respect to China and would therefore react similarly to China’s policies and actions. While the perspective matches the objective of BRI to promote intergovernmental cooperation, the G7 economies are much more polar than the democracies partnered with China. It is rather simplistic to assume that the US and Japan would have a similar stance towards China’s policies, especially when the US has been in a tense trade war with China recently while Japan enjoyed a healthy economic relation with Xi’s regime. It would be a bold statement to conclude that the US and the UK would be more cohesively adjoined towards the B3W relative to the China-Pakistan cooperation towards the BRI. Even when we disregard the years-long partnership between the Asian duo, the newfound initiative would demand more out of the US than the rest of the countries since each country is aware of the tense relations and the underlying desperation that resulted in the B3W program to shape its way in the Summit.
Moreover, the B3W is timed in an era when Europe has seen its history being botched over the past year. Post-Brexit, Europe is exactly the polar opposite of the unified policy-making glorified in the B3W initiate. The European Union (EU), despite US reservations, recently signed an investment deal with China. A symbolic gesture against the role played by former US President Donald J. Trump to bolster the UK’s exit from the Union. As London tumbles into peril, it would rather join hands with China as opposed to the democrat-regime of the US to prevent isolation in the region. Despite US opposition, Germany – Europe’s largest economy – continues to place China as a key market for its Automobile industry. Such a divided partnership holds no threat to the BRI, especially when the partners are highly dependent on China’s market and couldn’t afford an affront to China’s long envisaged initiative.
Even if we assume a unified plan of action shared between the G7 countries, the B3W would fall short in attracting the key developing countries of the region. The main targets of the initiative would naturally be the most promising economies of Asia, namely India, Pakistan, or Bangladesh. However, the BRI has already encapsulated these countries: China-Pakistan Economic Corridor (CPEC) and Bangladesh-China-India-Myanmar Economic Corridor (BCIMEC) being two of the core 6 developmental corridors of BRI.
While both the participatory as well as the targeted democracies would be highly cautious in supporting the B3W over BRI, the newfound initiate lacks the basic tenets of a lasting project let alone standing rival to the likes of BRI. The B3W is aimed to be domestically funded through USAID, EXIM, and other similar programs. However, a project of such complex nature involves investments from diverse funding channels. The BRI, for example, tallies a total volume of roughly USD 4 to 8 trillion. However, the BRI is state-funded and therefore enjoys a variety of funding routes including BRI bond flotation. The B3W, however, simply falls short as up until recently, the large domestic firms and banks in the US have been pushed against by the Biden regime. An accurate example is the recent adjustment of the global corporate tax rate to a minimum of 15% to undercut the power of giants like Google and Amazon. Such strategies would make it impossible for the United States and its G7 counterparts to gain multiple channels of funding compared to the highly leveraged state-backed companies in China.
Furthermore, the B3W’s competitiveness dampens when conditionalities are brought into the picture. On paper, the B3W presents humane conditions including Human Rights preservation, Climate Change, Rule of Law, and Corruption prevention. In reality, however, the targeted countries are riddled with problems in all 4 categories. A straightforward question would be that why would the developing countries, already hard-pressed on funds, invest to improve on the 4 conditions posed by the B3W when they could easily continue to seek benefits from a no-strings-attached funding through BRI?
The B3W, despite being a highly lucrative and prosperous model, is idealistic if presented as a competition to the BRI. Simply because the G7, majorly the United States, elides the ground realities and averts its gaze from the labyrinth of complex relations shared with China. The only good that could be achieved is if the B3W manages to find its own unique identity in the region, separate from BRI in nature and not rivaling the scale of operation. While Biden has remained vocal to assuage the concerns regarding the B3W’s aim to target the trajectory of the BRI, the leaders have remained silent over the detailed operations of the model in the near future. For now, the B3W would await bipartisan approval in the United States as the remaining partners would develop their plan of action. Safe to say, for now, that the B3W won’t hold a candle to the BRI in the long-run but could create problems for the G7 members if it manages to irk China in the Short-run.
COVID-19: New Dynamics to the World’s Politico-Economic Structure
How ironic it is that a virus invisible from a naked human eye can manage to topple down the world and its dynamics. Breaking out of CoronaVirus, its spread across the globe and the diversity of consequences faced by the individual states all make it evident how the dynamics of the world could be reversed in months. Starting from the blame games regarding coronavirus to its geostrategic implications and the entire enigma between COVID-19 and politics, COVID-19 and economies have shaken the world. Whether it is the acclaimed super power, struggling powers or third world states or even individuals, the pandemic has unveiled the capability and credibility of all, especially in political and economic domains. Wearing masks in public, avoiding hand shake and maintaining distance from one another have emerged as ‘new normal’ in the social world of interaction.
Since the pandemic has locked its eyes upon the globe, world politics has taken an unfortunate drift. From the opportunities for leaders to abuse power during state of emergency (which is imposed in different states to limit the spread of novel Coronavirus) to the likelihood of rise of far-right nationalists to the emergence of ‘travel bubbles’ between states (such as New Zealand and Australia) and the increased chances of regionalism in post-pandemic world to the new terrorist strategies to gain support and many others, all are result of the pandemic’s impact on the political world, one way or the other. Since the end of WWII, the United States has taken the role of global leadership and after the Cold War, it became more prominent as it was the sole superpower of the world. Talking ideally, pandemics are perceived to bring up global cooperation but in the COVID-19 scenario it has started a whole new set of debates, sparkled nativism versus globalization and the sharp divide in global politics has drifted the focus from overcoming the global pandemic through global response to inward looking policies of leaders.
Covid-19 has impacted every sphere of life, be it social, political, health or economic. The pandemic itself being the result of a globalized world has affected globalization badly. It is the best illustration of the interrelation of politics and economics and how the steps in one sector impact the other in this interdependent, globalized world. Political actions such as restricting travel had drastic economic impacts especially to the countries whose economy is largely dependent on tourism, foreign investment etc. Similarly, economic actions such as limiting foreign products’ access had political implications in the form of sudden unemployment and downturn in living standards of people.
For the first time in history, oil prices became negative when its demand suddenly dropped when industries were shut down almost everywhere. Russia and Saudi Arabia’s oil clash which led to increased oil production by Saudi Arabia further complicated the situation. This unprecedented drop in oil demand and consequently its price would only help in the economic recovery of countries. Covid-19 has impacted three sectors badly. First of all, it affected production as global manufacturing has declined due to decrease in demand. Secondly, it has created supply chain and market disruption. Finally, lockdowns affected local businesses everywhere. Bad impact aside, pandemic has led to the change in demand of products. Instead of investment and foreign trade, states having strong medical and textiles industries have got the opportunity of increasing exports. This is because there are requirements of face masks everywhere to avoid contagion. Need for medical instruments have also increased such as ventilators in developing countries specially.
The only positive impact of Coronavirus is that it fostered environmental cleanliness. It is said that it can avert a climate emergency but the fact is that, as soon as the lockdown will be eased and businesses will begin returning into functioning, economic growth and prosperity will be prioritized over sustainability and we might even witness, more than ever, carbon emissions into the atmosphere.
Novel coronavirus has brought new dynamics to the world’s politico-economic structure. While the world has the opportunity to come close for cooperation and consensus to fight it, we might witness increased regionalism in the post-pandemic world as a cautious measure and alternative where crisis management would be more cooperative and quick. There is a likelihood of the emergence of an international treaty or regime to ban bio-weapons. While the prevalence of political optimism is not assured in the post-pandemic world, we are likely to see the interdependent economic world, as before, to overcome the economic slump and revive the global economy.
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