Understanding World Developments
1. In modern times the planet earth has in fact not one world but two, the world of the developed or industrialized countries ( North America, Europe, Russia, Japan, Australia, New Zealand, and now also China ), and the world of the underdeveloped countries ( India being the most developed of the underdeveloped countries )..
2. The iron unwritten and undeclared rule imposed by the developed countries has been that UNDERDEVELOPED COUNTRIES MUST NOT BE ALLOWED TO BECOME DEVELOPED.
3. Why was this rule imposed ? It was imposed because if underdeveloped countries become developed the industries of the underdeveloped countries with their cheap labour, which is much cheaper than the cost of labour in the developed countries, would undersell the industries of the developed countries and thereby eliminate them by competition in the international market. Cost of labour is a big chunk of the total cost of production, and so if cost of labour is less the total cost of production is less, and one can then sell one's products at a substantially lower price, and thus undersell the industries of the developed countries, where labour is expensive.
4. However, in their search for super profits the developed countries set up some industries in the underdeveloped countries because labour was cheaper there. This was especially the case initially of industries requiring a huge amount of unskilled labour, which was available in abundance in the underdeveloped countries at a very cheap price. Thus, the British rulers set up many light industries like textile industries in India in which a lot of unskilled labour is required. Later, even many jobs requiring skilled labour, e.g. in the I.T. sector were outsourced to underdeveloped countries because labour costs were substantially lower there, and so profits could be greater.
5. After the Second World War this order was broadly imposed by the developed countries, but now it is coming apart, and the world is heading to a period of great historical convulsions, conflicts and chaos.
6. As mentioned above, the developed countries had themselves done a certain degree of industrialization in the underdeveloped countries in their search for super profits. But once the process of industrialization starts it picks up its own momentum and goes ahead. For instance, after Independence of India in 1947 a certain amount of heavy industries, e.g. iron and steel industries, were set up in India, as well as other industries. Today almost every country in the world has a certain level of industrialization.
7. The above process has contributed to the recession in the developed countries, because many of the goods which were earlier manufactured in the developed countries and sold in the underdeveloped ones are now being manufactured in the underdeveloped countries. Consequently the market for the industries of the developed countries has shrunk.
8. Unemployment is growing in the developed countries because (a) industries are becoming more and more capital intensive and automated rather than labour intensive, to reduce the number of workers and thus save labour costs (b) plants are being set up by companies of the developed countries in the underdeveloped countries rather than in their own countries, and jobs are being outsourced to underdeveloped countries, to save labour costs.(c) skilled personnel, e.g. I.I.T. graduates of India are picked up by companies in the developed countries and brought to the developed country as the cost of education in the underdeveloped country is much lesser than the cost of education in the developed country. So jobs are going to these foreigners rather than to youth of the developed country.
9. No doubt this outsourcing of jobs, setting up plants in underdeveloped countries and employing foreigners, has resulted in huge profits for the multinational corporations of the developed countries. But it has also resulted in growing unemployment in the developed countries, and consequential social unrest
10. Upto the Second World War there was a historical period of extreme nationalism, but after the War there was a period of internationalism, as the multinational corporations in their search for profits crashed through national borders. The European Union was created.
11. But now with the worldwide recession, which has been going on in the developed countries for a long time with no likelihood of a recovery, and the growing unemployment in the developed countries, we are witnessing a return to extreme nationalism, whose indications are Brexit and Trump's victory.
12. There is now likely to be a resurgence of protectionism and right wing politics, and consequential great turmoil and disorder
13. At the same time, people in underdeveloped countries like India are struggling to make their countries fully developed, because large scale industrialization alone will rid them of poverty, unemployment and other social evils.
14. But will the developed countries permit this ? If the underdeveloped countries become developed, then with their cheap labour their industries will undersell the industries of the developed countries.
15. A historical clash of the two worlds thus seems inevitable in the future