"National Seminar on Making Globalisation Work - An India Perspective"
December 18, 2006, New Delhi

Address by Dr Manmohan Singh, Honourable Prime Minister of India

“I am delighted to be here this morning among friends and a galaxy of eminent economists and thinkers. One of the joys of winter in Delhi is that along with a host of migratory birds we also have friends and scholars from the West visiting us! I truly and sincerely welcome this seasonal surge in intellectual activity in Delhi. The lectures that friends like Amartya and Meghnad give not only educate and illuminate, they often help clarify our own thinking on so many issues.

Today, I am particularly delighted to see another good friend among us. I have known the work of Dr Stiglitz for far longer than I have known him, and I have greatly profited both from reading him and knowing him. He is a true liberal in the best sense of that term.

I do think the great contribution of western intellectual thought to modern society has been the idea of liberalism. Amartya has reminded us in his book “The Argumentative Indian” that the idea of “pluralism” has its roots not just in western liberal thought but in Indian philosophy as well. It is true that debate and disagreement was a part of our intellectual tradition for centuries. However, the essence of liberalism captured by Voltaire’s famous aphorism, “I may disapprove of what you say, but I will defend to the death your right to say it", is an idea we owe to the rise of liberal philosophy. Dr Stiglitz epitomizes this tradition and I am, therefore, delighted to be here at a seminar that will discuss his work.

The debate on his earlier book on “Globalisation and Its Discontents” generated both light and heat. I have not seen any controversy being generated as yet by his new book! Perhaps, the debate on globalisation is now more balanced and nuanced, encouraging participants to be less shrill. However, we should expect this debate to be at times contentious, since the process of globalisation in the 21st Century is going to be a contentious process.

The challenge before scholars and political leaders is to minimize the disruptive and contentious aspects of globalisation, and maximize its benefits, especially for those who are as yet outside the pale of development.

I agree with Dr Stiglitz that neither the developed economies nor the developing can afford to either ignore or reject globalisation. These are not realistic options. Rather, we must learn to deal with it, cope with it and manage it. We have to manage both the economics of globalisation and the politics of globalisation. I would go one step ahead and say that we must also manage its cultural and intellectual consequences. These have to be managed in a democratic manner. And, when we talk of democratizing global governance, we must also accept the obligation of democratizing national and local governance.

Dr Stiglitz has put forward several interesting ideas on each of these issues, especially on bridging the “democracy deficit” in global governance. These ideas deserve careful consideration. I would like to know the considered view of your seminar on these proposals. Some of these ideas were proposed in the Report of the South Commission. But, so far they remain proposals because the political and intellectual leadership of the developed world has not yet shown a willingness to grapple with them.

Competition is a double-edged sword. Left to itself it helps the strong and can hurt the weak. In social and economic phenomena, the biblical saying "to him that hath shall be given" has a wide applicability. Hence, the role for state intervention and the need for “rules of the game” that ensure that the costs and benefits of competition and of globalisation are spread out as evenly as possible.

I do believe that even in a wholly globalised and integrated world, States have a role to play. People in democratic societies expect Governments to deliver on their basic needs, both economic and social needs. While the private sector will increase its role and bring prosperity to newer generations of entrepreneurs, professionals and workers, the Government will be expected to step in and provide a range of services. These include, apart from law and order and internal and external security, the provision of basic education, public health and basic medical care, the protection of the environment and such like.

If the Government has to provide such services then the Nation State must be able to mobilize and deploy both financial and administrative resources. Thus, even in a “borderless world”, to use Fukuyama’s evocative concept, Governments will have a role to play and will be expected by the people to play that role.

Moreover, private capital flows will go only where risk is quantifiable and reward is tangible. While globalisation has enabled increased flows of capital from the developed to the developing world, States will continue to have a role. People expect governments to invest in public goods. Official development assistance must be extended to bridge the development gap between the world’s haves and have-nots.

When we talk of “globalisation” and of a “borderless world”, the focus so far has largely been on the movement of goods, capital and, largely, financial and logistical services. There is as yet no framework for the movement of people. On the other hand, developed economies are becoming more restrictive with respect to immigration and the movement of labour. Even economic theory has largely focused on merchandise trade and capital flows, paying little attention to the economics and politics of managing migration in the uncertain world that we live in.

Even in the area of trade, we have still not been able to find an acceptable basis for making globalisation more development oriented. This was the great mission of the Doha Development Round of multilateral trade negotiations. The Doha Round was explicitly called a “Development Round” because of the anxieties generated by the globalisation process. In fact Dr Stiglitz’s work played an important role in shaping this global debate.

If the Doha Round has to have a successful outcome, and we sincerely wish this, then it must remain true to its original mandate of being a Development Round. We can not continue to live in a world of “butter mountains” and “rivers of milk”, liberally funded by government subsidies, when the poor starve in the villages of the Third World. We all know subsidies distort trade. In the case of the agricultural subsidies offered by developed industrial economies, these not only distort trade but destroy lives.

We must find ways in which trade aids development to ensure that globalisation works for all. This is the challenge before the leadership of the developed world.

While economists have paid some attention to the economic consequences of globalisation and the management of economic globalisation, not much attention has been paid to the politics of globalisation and its political management. The United Nations could have been a political instrument of managing globalisation, but so far it has not succeeded. Indeed, it will not be able to succeed unless it reforms itself as an institution and its own management is more democratic and more representative.

Globalisation in an increasingly multipolar world requires global “rules of the game” not just for trade and capital flows, but for the management of peace and security, the management of the environment and of resource use. Just as Nation States are unable to command the forces of economic globalisation, Nation States are also proving ineffective in dealing with the social, cultural, political and environmental aspects of globalisation. Be it HIV AIDS or Avian Flu, be it global warming or terrorism, governments find themselves constrained in dealing with these “cross-border” threats. When such threats emanate from non-State actors, governments are even less equipped to deal with them.

In Asia too we need regional institutions that will enable us to deal with regional challenges and opportunities. While regional associations and arrangements are here to stay, we cannot neglect the need to strengthen global institutions and multilateral arrangements.

We are at a crossroads once again in the evolution of human history. The world in the 21st Century cannot be managed in the way we have tried to manage it in, what Eric Hobsbawm dubbed, “The Short 20th Century”. Both in the first half and in the second half. The rise of Asia, the rise of other new nations and political movements, the emergence of new technologies, especially information, communication and entertainment technologies, global pandemics and global environmental challenges. All these present new challenges. We need new responses. Old ways of managing global affairs, wherein single digit “Group of Nations” could constitute themselves into a global board of management, are over.

There are, of course, a few Big Powers, and these will continue to exercise global influence. But we must learn to work with nations big and small. That is the challenge and the opportunity before us. The sooner we learn to deal with this challenge the easier would it be for us to turn globalisation into an opportunity.

I hope the wisdom of scholars gathered here can guide those of us charged with the responsibility of managing governments in these challenging times. I wish your seminar all success.”