by Roberto Verzola Roberto Verzola is the coordinator of Interdoc, a loose international network of non-government organizations (NGOs) which is tracking the impact of the emerging global information economy on developing countries and on social movements. He is also the secretary-general of the Philippine Greens, a political formation dedicated towards building self-sufficient communities guided by the principles of ecology, social justice and self-determination. He makes a living operating an electronic mail service for NGOs, and is an electrical engineer by training. This paper was presented at the international conference "Colonialism To Globalization: Five Centuries After Vasco da Gama", sponsored by the Indian Social Institute (ISI) on February 2-6, 1998, in New Delhi, India. Our common colonial experience Today's debates about globalization recall our experience against colonialism. We are all familiar with the latter. The dates may have varied; the colonizing country may have been different; but the main features of our common colonial experience were basically the same:
This period of colonialism may be called the first wave of globalization. A range of anti-colonial responses The independence struggles waged by our peoples in response to this wave of globalization are also familiar to all students of history. Many of these independence struggles were eventually resolved through successful armed revolutions. We in the Philippines, for instance, commemorated in 1996 the centennial of our own revolution against Spain -- one of the first of the national independence movements that eventually emerged in this part of the globe. Similar armed struggles erupted in Indonesia and China. In countries like Malaysia and India, colonial forces peacefully withdrew and turned over formal political power to the local elites, who often retained the same colonial set of laws, bureaucracy and armed forces that had served the foreign masters. Again recalling our own experience, the United States used superior military power to wage a genocidal war against us in 1898, aborting the newly-born Philippine republic that emerged out of our 1896 revolution, imposing an equally plunderous colonial regime on our lands and peoples, and extending our painful colonial experience for another half a century. In 1946, the Americans peacefully turned over formal political rule to the local elites, after first making sure that the 'newly-independent' Republic of the Philippines was bound by economic and military treaties that negated claims of genuine sovereignty. Where independence was won by arms -- in China, for example -- the colonial economic and political interests had to beat a full retreat, their territorial rights and businesses lost and their properties confiscated and nationalized. Where independence was 'granted' to a local elite which had been trained by their colonial masters, the latter nonetheless had to put up with some nationalist efforts by locals to regain control of their economy. These took the form of foreign ownership limits, profit remittances restrictions, local content requirements, export and import quotas, and other attempts to regulate foreign businesses. In the Philippines, for instance, foreigners were allowed a maximum of 40% ownership in corporations, and were excluded from specific areas like media and communications, natural resources exploitation, the professions, and retail trade. The latter restriction, by the way, exempted Americans by virtue of a post-war agreement they forced the Philippines to enter into, under threat by the U.S. to withhold any post-war aid if several treaties it wanted were not ratified. The corporate counter-response During this post-colonial period, the role of global capital expanded, partly due to internal developments in their home countries, and partly as a counter-response to independence movements and economic nationalism. Having lost direct control, global capital sought and became better at indirect control; military aggression was replaced by culture-aggression and economic control. By this time, internal developments within the colonizing powers themselves had prepared their economies for this shift: many of them had reached the late industrial stage of development. Huge private corporations in partnership with governments had accumulated vast amounts of financial wealth, turning money itself into a major commodity. These corporations needed new markets and investment areas, rather than colonial territories that were becoming more and more difficult and costly to retain politically and militarily. We are also familiar with these post-colonial developments.
The second wave of globalization This post-colonial wave may be called the second wave of globalization, where industrial countries and global corporations would range across the globe for investment areas, industrial markets, trading partners, and sources of cheap labor and raw materials. This wave has gone through several phases, reflecting the progress of an unequal contest between powerful countries strengthened by the immense wealth they had drawn from colonial victims on the one hand, and the newly-independent nations weakened by centuries of plunder and exploitation on the other hand. The early-independence phase was often marked by intense economic nationalism, as local economic interests tried to enhance their economic sovereignty through protectionist measures, while global corporate interests fought to retain their colonial privileges. The second phase saw a succession of crises that included the oil shocks of the 1970's, the debt crises of the 1980's, the socialist crisis of the early 1990's, and the financial crisis of the late 1990's, which is still going on. Socialism had earlier provided a counter-balance to global corporations and their governments, as well as a possible alternative path for independence movements. These crises weakened the capacity, the will, and the overall position of the former colonies and enabled global corporations to launch major counterattacks in order to regain much of the colonial power and privileges they had lost during the economic-nationalist phase. The post-colonial counterattacks by global corporations mark the third phase of this second wave. This counteroffensive forced many countries to surrender much of their economic sovereignty to corporate-controlled international institutions such as the International Monetary Fund (IMF), the World Bank (WB) and the World Trade Organization (WTO). Through loan conditionalities, structural adjustment programs, and other means, many nationalist laws and provisions gained by earlier anti-colonial independence movements were undermined and dismantled. Some authors -- Chakravarthi Raghavan, for example -- have called this phase a process of "recolonization", a return of colonial privileges for global corporations. The impacts of this wave of globalization are no less destructive than the colonialism that preceded it. Our agricultural products consistently suffer from low prices; our workers from low wages. We are losing much of our capital due to profit repatriation and the debt crisis; chemical farming is taking away our food security and putting it in the hands of global chemical and seed conglomerates. We are suffering from widespread ecological disasters, triggered by intensive resource extraction, disruptive energy projects, and toxic pollution. Our forests, mines and quarries are being quickly depleted; our air, water and soil heavily contaminated; and pervasive monoculture is seriously threatening our biodiversity. We enjoy national sovereignty in name only. This part of our history and current events should also be familiar to most of us. Alert: the third wave is coming We are still in the midst of the second wave of globalization, yet a third one has already emerged. The third wave of globalization began to be felt worldwide in the last half of the 1990's and will probably express its overwhelming presence in full force at the dawn of the 21st century. This looming third wave is the global information economy. Like the first two waves, the third globalization wave arose from internal developments within the hearts of the global powers. It is important to look at these internal developments, because they will, as in the past, eventually impinge on the rest of the world -- including our own -- often shaping our destinies and steering our development in directions we never wanted to take. The colonial powers were mercantilist and, later, industrial countries in their early expansionist stages. The post-colonial powers were industrial countries in their late stages, when capitalism had developed further, combining industrial and finance capital into huge monopolistic conglomerates in continual search for new acquisitions, sources of cheap raw materials and labor, and markets. The third wave of globalization is marked by the emergence and eventual dominance, within the most advanced industrial countries, of the information sector -- the sector that produces, manipulates, processes, distributes and markets information products. There is enough literature that describes the dominance of the information sector in the U.S. One of the earliest is a landmark study by Marc Porat, who analyzed some 201 industries in the United States in 1967. Here's an account of Porat's study (Megatrends by John Naisbitt, 1982): "Porat sorted through some 440 occupations in 201 industries, identified the information jobs, and compiled their contribution to the GNP. Questionable jobs were excluded so that the study's conclusions err on the conservative side. "Porat's study is incredibly detailed. He begins with the obvious sorting-out and tallying-up of the economic value of easily identifiable information jobs such as clerks, librarians, systems analysts, calling this first group the Primary Information Sector. According to Porat's calculations for the year 1967, 25.1 percent of the U.S. GNP was produced in the Primary Information Sector, that is, the part of the economy that produces, processes, and distributes information goods and services. Included here are computer manufacturing, telecommunications, printing, mass media, advertising, accounting and education, as well as risk-management industries, including parts of the finance and insurance businesses. "But Porat's study goes on to deal with the more difficult questions that have overwhelmed other researchers. How does one categorize those individuals holding information jobs with manufacturers and other non-information firms? To answer this question required 'tearing firms apart in an accounting sense into information and non-information parts.' "Porat creates a new information grouping called the Secondary Information Sector. It quantifies the economic contribution of information workers employed in non-information firms. "These workers produce information goods and services for internal consumption within goods-producing and other companies. In effect their information products are sold on a fictitious account to the goods-producing side of the company. The Secondary Information Sector generated an additional 21.1 percent of the GNP. "Porat's study concludes, then, that the information economy accounted for some 46 percent of the GNP and more than 53 percent of the income earned. This was in 1967." This was also before the widespread use of satellite communications, fax machines, cell phones, cable television, personal computers and, of course, the Internet. Today, there is no doubt that the information sector is the dominant sector of the U.S. economy, making the U.S. the leading information economy in the world. A global information economy The increasing dominance of the information sector in what had been industrial economies is turning them into information economies. These emerging information economies -- principally the U.S. and to a lesser extent some countries of Europe -- are at the core of the third wave of globalization. Because of the way these economies are so closely interconnected, they are better seen as a single emerging global information economy. The Internet is perhaps the most visible portion of this economy -- and certainly the one which has received the most media attention. This emerging global information economy includes the global infrastructure for telecommunications, data exchange, media and entertainment; the knowledge industries; the publishing industries; the computer hardware and software industries; the new financial systems that will support online transactions; the emerging global legal infrastructure based on the WTO, including the GATT and the agreements in information technology, telecommunications and financial services; and the biotechnology and genetic engineering industries. Unlike the first two waves, the implications and consequences of the global information economy are an unfamiliar phenomenon to most of us. There are so many new things, so many new possibilities, that it is quite difficult to separate the chaff from the grain, the hype from the substance. This is what this final portion of my paper will try to do. Information: a closer look Let us look closely at the archetypal information product: information stored in a magnetic medium. It can be software on a diskette, databases on hard disks, an audio cassette, or a video cassette. Remember that the product is not the medium but the message; it is neither the disk nor the tape, but their contents. The same medium with a different message is a different product; the same message on a different medium is the same product. Other forms of information, like books and other printed publication, live audio and video information, drawings and designs, and genetic information may now be easily transformed into their archetypal equivalent. The distinctive feature of an information product is that it can be copied at little cost. The cost of copying books is still on the high side, but the cost of copying electronic data is nearly zero. Furthermore, we can give copies away without losing our own copy. This is true of software, databases, songs, videos, designs, and most other information goods -- including genetic information. In short, the cost of reproducing information -- what the economist calls its marginal cost -- is very much lower than the cost of initially producing the information -- its development cost. The marginal cost of information is so low that it oftentimes approaches zero. In the last analysis, this feature is due to the very nature of information itself. Information is non-material in its essence -- a numeric measure of the uncertainty which it resolves. The non-materiality of information is the basis of its low reproduction cost, which may be driven lower and lower by adopting representations that can be manipulated at lower costs. With today's digital representations, the costs of reproducing and distributing information have reached historic lows -- as low as the cost of copying a diskette or downloading a file from an online server. Low marginal cost leads to sharing The low marginal cost of information has two major implications: one for those who use it, and another for those who sell it. For users, it encourages sharing. Many cultures, in fact, see knowledge as social wealth -- a collective asset that is meant to be shared. These cultures -- including most Third World and indigenous cultures -- are therefore in close harmony with the very nature of information. When we share software, for example, we are only being true to the nature of information and to our own cultures. But there are other cultures, where private property concepts have become more absolute and where almost everything has been commodified. In these cultures -- often with capitalism at their core -- information has become an object of commodification and privatization. Culture itself has become commodified, together with knowledge and life. They have become vehicles for profit-making. Profit-making mechanism: the monopoly Let us look more closely at the mechanism of profit-making through information. First, the seller turns information from a collective asset into private property. Then, copies are sold on the market, at prices set by the "owner"/seller. Once the initial sales have covered the development costs, the near-zero marginal cost of reproducing information now makes its selling price nearly pure profit. A diskette of software that may be copied for cents is sold for fifty dollars. A CD ROM that may be reproduced for three dollars is sold for three hundred. To realize these extremely high profit margins made possible by the low marginal cost of information products, however, the seller must create an artificial scarcity of the product. We have seen that information can now be easily copied by users themselves at practically no cost, creating a natural abundance which drives prices down. To keep prices and profit margins high, this natural abundance that proceeds from the essence of information itself must be prevented. The seller does it by acquiring from the State a monopoly in using and making copies of the information product, and by criminalizing sharing among users. This creates the artificial scarcity that drives prices up and realizes for the seller the potential profits from high margins. It is monopoly that creates the scarcity. Such monopolies are euphemistically known as "intellectual property rights (IPR), the main form of ownership in an information economy. They are the mechanism for maintaining the high profit margins of those who control and sell information products. IPRs have two major forms: copyrights (historically, limited monopolies covering literary materials), and patents (historically, limited monopolies covering inventions). In recent years, as the information sector gained dominance and the propertied classes of this sector increased their political and economic power, IPRs have been strengthened and extended to new areas. IPRs are statutory monopolies. They are monopolies over information granted through statutes, by the State. Those who control information through IPR are basically rentiers: they make money by charging monopoly rents from users, who are threatened by State action should they continue to practice information sharing. In the Philippines, monopolies represented by the Business Software Alliance (BSA), in collaboration with the Philippine government, have actually raided educational institutions and commercial shops to enforce their information monopolies. Conflicts within the information economy Still, enforcing information monopolies is not simple. After all, information monopolies are incompatible with the social nature of information. The deeply-ingrained cultural habits of information sharing and exchange continue to assert themselves, regardless of the will of monopolists and their State protectors. This is the dilemma within the emerging global information economy. On the one hand, information itself is a highly social good; on the other hand, the forms of ownership are highly monopolistic. On the one hand, users tend to share information goods; on the other hand, IPR holders insist on their monopolies. On the one hand, developing countries need the widest access to various technology options at the least cost; on the other hand, rich and powerful information economies control almost 90% of all the IPRs in the world today, and want to increase their control further by criminalizing cultures that treat information as collective wealth. The basic conflict within the information sector is the incompatibility between the highly monopolistic forms of information ownership and the social nature of information. This conflict is also expressed between users who want to share information freely and monopoly claimants who want to prevent free sharing of information. It is further reflected in the conflict between developing countries who need low-cost access to major bodies of information and information economies which have established virtual monopolies over information and want to criminalize the Third World culture of sharing knowledge and information. Historically, these information economies are basically the same colonial powers that have exploited developing countries over the centuries. The socializing tendency emanates from the nature of information itself, and can therefore never be suppressed. The monopolizing tendency emanates from the potentially high profit margins in selling information and the economic and political power concentrated in information monopolies. The conflicts arising from these two opposing tendencies will drive the historical development of the third wave of globalization. Internal engine Within the U.S., the high profit margins in the information sector is attracting more investment capital towards this sector, away from the agricultural and industrial sectors. This is the internal engine that is slowly transforming the U.S. economy into an information economy. Within the emerging global information economy itself, monopoly concepts are already well-established and are even expanding their coverage. One item, for instance, is always non-negotiable in the U.S. diplomatic agenda: intellectual property rights (IPR). These concepts are increasingly dominating international legal systems through bilateral negotiations with the U.S. and through the World Trade Organization (WTO). Thus, worldwide, pressure is increasing on countries with non-monopolistic attitudes towards information to adopt the same U.S. legal system that strictly protects IPRs. However, the social nature of information continually asserts itself. Information abundance created through user sharing and exchange keeps breaking through the artificial scarcity created by information monopolies. The latest releases of popular software, songs or video immediately find themselves being copied in every corner of the globe. In effect, information automatically globalizes itself regardless of the will of those who insist in monopolizing them. Ironically, information monopolists find their products better distributed in those parts of the globe where they could not enforce their monopoly. They therefore insist on imposing monopolistic legal systems upon the rest of the globe, so they can realize the same profit margins they enjoy in their monopoly areas. Even one country that refuses to be part of this global legal system will pose a threat to their global monopoly, thus they will exert every effort to bring it in. These monopolists will never leave any country -- or any community -- alone. They are the real engines of globalization's third wave. This is also what makes the information sector qualitatively different from the industrial and agricultural sectors. It justifies why the emergence of the global information economy must be considered a distinct wave in itself, instead of simply a part of the second wave of globalization. Cyberlords Information monopolies may be established not only by staking monopoly claims over information content through IPR, but also by controlling the hardware infrastructure for manipulating or distributing information. This infrastructure includes computer centers, voice and data switching centers, communication lines, television and radio stations, satellite networks, cable networks, cellular networks, movie houses, etc. Like their software counterparts, most owners of the hardware infrastructure make money through monopoly rents, in the form of subscription fees or per-use charges. Because they earn their incomes from monopoly rents, the propertied classes of the information sectors are rentier classes. They are the landlords of cyberspace, or cyberlords. The content monopolies are owned by information cyberlords, and the infrastructure monopolies are owned by industrial cyberlords. The richest man in the world, Bill Gates -- as well as several others among the ten richest -- is a cyberlord. The economic powers of cyberlords are immense, and these powers are increasingly being felt in the political and diplomatic arena. Among U.S. negotiators, for instance, IPR -- the mechanism which gives software cyberlords their power -- is invariably a non-negotiable item in their agenda. It is the partnership between information cyberlords, industrial cyberlords, and finance capitalists which is the at the core of the third wave of globalization. To sum up: an information economy is one whose information sector has become the main source of wealth, eclipsing its industrial and agricultural sectors. The products of industrial and agricultural economies are material goods; the products of an information economy, however, are non-material goods. The reproduction cost of information goods is very low. This has led to the widespread social practice of freely sharing and exchanging information. On the other hand, it also promises extremely high profit margins, if the seller can monopolize information. Information monopolies have become the main form of ownership in the information sector. The high profit margins that they realize have led to a continuous movement of investment capital towards the information sector, eventually making it the dominant sector of the economy and transforming the economy into an information economy. The products of this information economy spread worldwide, as people freely share and exchange information goods. Thus an information economy needs a global system for enforcing its monopolies as well as for gathering information materials, tapping intellectuals and of course collecting payments worldwide. This leads to the globalization of the information economy and is the engine of the third wave of globalization. The main propertied classes within the information economy are information cyberlords, who control information content, industrial cyberlords, who control information infrastructures, and finance capitalists, who control investment funds. First to third waves: a comparison Let us compare the emergence of the global information economy with the two previous waves of globalization:
Super-exploitation The global information economy will also enable those with vast resources to concentrate wealth further into their hands. To illustrate this capacity for super-exploitation unleashed by third wave technologies: imagine a corporation which can afford to automate its international financial transactions so that its computers could do a round-the-clock, unattended scan of the global financial markets for opportunities, make decisions automatically, and conclude a financial transaction within one second or a buy-then-sell transaction pair within two seconds, and execute such transactions 24 hours a day, 365 days a year. Compare such a corporation with less capable investors who might be able to do transactions only once a minute, once per hour, or perhaps once a day. The following table shows how soon each investor would be able to double their investment funds: Table: Time needed to double investment funds Frequency of transactions ---------------------------------------- Profit Margin for every Once per Once per Once per Once per buy-then-sell transaction day hour minute second 1% 4.6 mos. 5.8 days 2.3 hrs. 2.3 min. 0.1% 46 mos. 58 days 23 hrs. 23 min. 0.01% 38 yrs. 19 mos. 9.6 days 3.9 hrs 0.001% 380 yrs. 16 yrs. 3.2 mos. 1.6 days 0.0001% 3,798 yrs. 158 yrs. 2.6 yrs. 16 days 0.00001% 37,983 yrs. 1,583 yrs. 26 yrs. 5.3 mos. Even with the thinnest margins of profit, a suitably-equipped finance firm can double its investment funds within days, if not hours. Who but the largest financial conglomerates would have the resources and the connections to set up and maintain automated, round-the-clock facilities with a global reach that can conclude a transaction every second? We had better think again, those among us who imagine that the Third World can leap-frog second wave economies and ride the third wave by surfing the Web or by selling our agricultural and manufacturing commodities and our cheaper labor over the Internet. While we are still saving money to upgrade our obsolete computers, they will have multiplied their investment funds many times over. What we face here is really a new personification of greed, one that has freed itself of distracting human feelings like love, compassion, charity, guild, fear and other emotions, leaving only pure greed, unencumbered and free to pursue singlemindedly the one and only thing that motivates it: profit. It is the search for profit by global corporations that is powering the whole process. These corporations have even acquired their own rights, which are often more favorably recognized than the rights of real persons. They have learned to nourish themselves and to grow by feeding on nature, people, and information. They have become increasingly aggressive in asserting their freedoms ("liberalization"), overcoming government controls ("deregulation") and in taking over government activities ("privatization"). Corporations had earlier shared global rule with governments. Now, they want to rule it by themselves ("globalization"). The colonization of our countries that began in the 16th century hasn't really stopped. It has just changed forms, coming in waves of globalization that intrude into our communities, impose their unwanted rule, and squeeze the wealth out of our people and environment. Each improvement in technology, each transformation of capital, creates new ways of extracting wealth from us, continually enriching those who control the technology and our economy while impoverishing us, destroying local livelihoods, ravaging our natural resources, and poisoning our environment. The first wave has ebbed, but we are still deep within the second wave, and the third wave has already started lapping our shores. Responding to the third globalization wave How do we respond to globalization? To the first wave, we responded with independence struggles, ranging from armed revolutions to peaceful lobbies for independence. Economically, our responses ranged from outright confiscation and nationalization of foreign property, to negotiated purchases of foreign corporations at full commercial prices. Thus, historically, we can identify a period of economic nationalism worldwide, when newly-independent countries in Asia, Africa and Latin America tried to regain control of their economies through a range of policies favoring local economic interests and institutions. Then came the post-colonial second wave of globalization, both in response to our independence struggles and as a consequence of internal developments within the economies of powerful countries themselves. Responses to this second wave have ranged from communist-led armed struggles, to elite-led protectionist regimes. Many of these responses have floundered as crises upon crises beset our countries, enabling former colonial masters to recover much of their early privileges. In general, the second wave of globalization remains dominant over our national and community life, having managed so far to counter all the various responses that have confronted it. We're still under the second wave, and now comes the third wave. How do we respond to this new wave, and how should our response be related to our continuing efforts to confront the second wave of globalization? A Green response We can learn from some of the responses of social movements which have confronted specific issues involving the information economy. An illustrative set of responses can be seen in the program of the Philippine Greens for a non-monopolistic information sector. The following are the major elements of this program (Society, Ecology and Transformation by the Philippine Greens, 1997):
These responses must also be linked with ongoing struggles against the second wave of globalization. By doing so, we can bring together the widest range of people, whose unity and joint action can bring about a political structure that can comprehensively address the challenges of globalization. As the Philippine Green program indicates, one of the tasks of such struggles is to develop a non-monopolistic information sector, where intellectual activity is rewarded through non-monopolistic mechanisms which are more consistent with the social nature of information. This will involve a radical rethinking of property concepts in the information sector, reinforcing similar demands for property restructuring in the industrial and agriculture sectors. Eventually, enough social forces must be mustered to confront squarely the powerful forces of globalization. We can expect this historic confrontation to demand from us the same kind of courage, sacrifice and heroism which the earlier anti-colonial struggles demanded from our national heroes. How we rise up to this challenge will determine whether our children and grandchildren will live as neo-slaves under a global system as cruel and heartless as the colonial system of old, or as free citizens living in communities where knowledge and culture are again freely-shared social assets, where industrial machinery is appropriately designed to serve and not to enslave human labor, and where ecology -- as it had been in earlier times and still is in some communities -- is the organizing principle in agriculture. Final lesson There is one final lesson, among so many, that our own colonial past teaches us. The first Spanish colony was set up in the Philippines in 1565. Over the next three centuries, colonization would encroach on most of the archipelago, except the Muslims of Mindanao and the upland indigenous tribes. Isolated rebellions would occur but could not shake Spanish rule. In 1864, a public manifesto by a Filipino priest began a Propaganda Movement, which eventually awakened our people's anti-colonial consciousness. In 1896, a full-scale revolution broke out. By 1898, the revolution had for all intents and purposes defeated Spanish colonialism. It took some three hundred years before we Filipinos shook off the colonial mentality that immobilized most of our people and made them vulnerable to Spanish rule. The campaign for the Filipino mind took another thirty years to win. Within three years of anti-colonial armed struggle against Spain, victory was in sight. The struggle to unmask the colonial monster was ten to a hundred times more difficult than the struggle to bring it down. Let us keep this lesson in mind today, when we are yet at the early stages of unmasking the monster of globalization. Let not the seeming immensity of this task cloud our vision of the future, when our communities and nations shall at last be free to chart their own destinies guided by the principles of ecology, social justice and self-determination.
5 February 1998
108 V.Luna Road Extension, |