As discussed in Chapter 4, finance theory informs the approach taken by this study to households by identifying volatility as a cost burden of risk and identifying potential risk management strategies through portfolio allocation. In applying this micro-level analysis to households in Pakistan, evidence of monetary volatility as a substantive concern for ordinary people is sought out. Where found, such findings help to substantiate the argument that the liberalisation of money and markets and consequent exposure of money to global liquidity has generated meaningful change in money and the monetary environment.

This chapter discusses how, by drawing on field interviews, the study seeks out evidence of the substantive experience of risk attached to the liberalised rupee amongst households and in local bazaars. The chapter opens with a review of existing methodologies for interrogating household finances before setting out the methods utilised in field interviews for this study. The second part of the chapter systematically lays out the findings from field interviews in raw form. Worked in with the macro analysis from chapters prior, secondary fieldwork and newspaper articles, these findings are analysed in Chapter 6 to produce the conclusions of the final two chapters.

The field interviews thus inform the analysis of the monetary environment in Pakistan yet the interviews do not seek to unambiguously prove certain findings. The intention is not to fully scope the dimensions of alternative ‘currencies’, but to identify the ways in which the conventional understanding of the pre-eminence of state money as means of exchange, store of value and unit of account is being challenged in often ad hoc but quite comprehensive ways. Hence, the field interviews do not seek to establish a schema of risk management strategies through proportional sampling and a rigorous quantitative survey. Neither do they seek to develop an ethnographic description of the subjective and culturally mediated experience of financial risk. Rather, the field interviews seek to open up the question of money and globalisation to further analysis by exploring disruptions to mainstream assumptions about money and its governance in the field.

From kinship to the state. With the rise of prosperity, control over the means of violence shifts from kin groups to states.

Introduction

Though in the initial stages of development, urbanization follows as an outcome of development, subsequently it also results in development (Mills and Becker, 1986; Fujita and Thisse, 2003). One of the reasons for both being associated with each other is that with urbanization economic opportunities are expected to grow significantly for all sections of the population and thus an inclusive society is likely to emerge. The interactions among different classes at the workplace and in various facets of life may become so intense that the traditional barriers of caste, class, and religion may get dissipated, offering opportunities to those at the lower echelons to experience upward mobility. This is, of course, only a theoretical expectation, the realization of which depends on a variety of preconditions.

The advocates of balanced urbanization often oppose population concentration in a handful of large urban centres (Mills and Mitra, 1997). But it is difficult to ignore the positive outcomes of agglomeration economies associated with population concentration (Mills and Mitra, 1997). As mentioned in the preceding chapters, productivity gains are higher in large urban settlements and thus, there is a tendency for new firms to reap the locational advantages (Mitra, 1999). However, beyond a certain stage these gains tend to get neutralized and subsequently overshadowed by the increasing costs or diseconomies associated with population increase in large cities.

In the Indian context, many mega cities, which once upon a time attracted a lot of investment and accounted for a large component of economic activities, have started indicating signs of decline, possibly because they have attained the saturation limit. Thereafter, whether the next tier cities are ready to take over the lead role, substituting the role that the mega cities once played, is an important question. However, this may not always follow. A usual outcome of this is that as a large city gets saturated, new economic activities gradually come up in the rural hinterland. This is the second best solution for new firms because by being invested in these activities, they are able to avoid the diseconomies that the core city generates and at the same time they may have access (due to locational proximity) to the agglomeration economies that the core city offers. In the backdrop of this perspective we analyse the new trends in Indian urbanization, particularly the small (census) towns which have emerged between 2001 and 2011.

Appendix: Nagaland in Numbers, 1961–2011

In a course I teach on the dynamics of global capitalism, I begin with two sets of photos: garment and auto factories at the turn of the twentieth century and at the turn of the twenty-first. Students can see that the auto factory has undergone radical change, transforming the shop floor from a labour-intensive environment to one that is capital-intensive and reliant on advanced machinery. Robots now piece and fuse parts in an automated rhythm where previously workers had toiled by hand. The garment factory, however, looks much the same, with its rows of women hunched over sewing machines. While the demographics and pace may have changed, the factories, machinery, and value chain structure seem to exist outside of time, isolated from the developments that have transformed the rest of the global economy.

There's much that is striking about this pairing. First, autoworkers generally have higher union density now than garment workers and earn significantly higher wages because of it – despite all the assembly being done by robots. Second, it captures the sheer durability of the sweatshop within the garment sector. As I demonstrate in this book, the regulatory regime that had once enforced a degree of spatial inflexibility finally dwindled to nothing with the 2005 MFA phase-out. And the emergence of market spatial inflexibility, which gives labour new openings, can only occur if the flows between supplier and buyer are unrestricted. With this change, and a capable labour movement, there is hope yet that garment factory workers may close the gap.

A radical restructure of production

On 30 November 2018, the High Court of Bangladesh implemented a restraining order – passed days earlier – mandating the closure of the Dhaka office of the Accord for Fire and Building Safety (‘Accord’) and forcing its staff to leave the country. Introduced following the tragedy at Rana, the Accord had been heralded as an auditing regime finally capable of remedying the inhumane and often downright dangerous conditions that were endemic to Bangladesh's garment industry. However, the High Court's November restraining order, which pre-empted a negotiated 2021 Accord extension, was the result of concerns over inadequate government scrutiny.

This chapter shows how conflict between the American hegemon and a rising China led to the collapse of the Doha Round (2001–11) and the breakdown of the WTO’s core negotiation function. At the center of the Doha standoff, I argue, is a dispute between the US and China centered on how China should be treated in the multilateral trading system. China has maintained that, as a developing country, it should be entitled to the special and differential treatment (SDT) promised to developing countries. The US, however, is unwilling to extend such treatment to its chief rival, and therefore refused to conclude the round without greater market opening from China. China rejected American demands that it undertake additional liberalization concessions, and, in doing so, showed that it has sufficient power to refuse to concede to US demands that it views as fundamentally against its own development interests. The US has a long track record of successfully overpowering opposition in multilateral trade negotiations and securing assent for its desired outcomes. Yet, in contrast with the past, the US has been unable to overpower China, and this deep and lasting impasse between the two powers resulted in the collapse of the Doha Round.

This chapter examines efforts to establish new global rules to restrict export subsidies for coal-fired power plants, which are highly polluting and a major contributor to climate change. Government-backed export credit for coal power plants acts as a form of export subsidy, and thus promotes the expansion of such plants abroad. The US spearheaded multilateral negotiations within the context of the OECD Arrangement to prohibit the use of export credit for coal power plants. However, since China is not part of the Arrangement, it was not a participant in the negotiations or bound by the new disciplines created. China’s absence, I argue, weighed heavily over the negotiations and undermined efforts to construct an ambitious agreement. OECD exporters were extremely resistant to agree to restrict their use of export credit when China—the world’s largest supplier of export credit for overseas coal plants, accounting for nearly half of all export credit in this sector—would face no similar restraints on supporting its exports. Without China’s participation, the impact of the resulting agreement is severely limited. This case thus highlights the difficulty of building effective global trade rules today without the participation of China.

The American hegemon’s ability to exercise power in and through international institutions has been sharply constrained by the rise of China. China has consistently thwarted US efforts to construct new global trade rules, producing a recurrent deadlock across a wide range of different areas of global trade governance. The rise of China and its resulting clash with the US is blocking global rule-making in trade and undermining the institutions designed to prevent global trade wars. The China paradox—the fact that China is both a developing country and an economic powerhouse—has created significant challenges for global trade governance. The issue of whether, and how, the rules of the multilateral trading system will apply to China is proving to be a difficult and intractable source of conflict. While China demands exemptions from global trade disciplines as a developing country, the US refuses to extend special treatment to China and insists on universal rules and reciprocal concessions. This fundamental conflict over how China should be treated in the multilateral trading system, which has paralyzed global rule-making in trade, has profound implications—not only for the governance of global trade, but also for pressing issues related to global development and environment.

China’s rise has transformed the global politics of agricultural subsidies, which is among the most controversial issues in the trading system. China has emerged as the world’s largest subsidizer, upending the entrenched understanding of agricultural subsidies as a harm perpetrated by the Global North upon the Global South. From a North-South battle, WTO negotiations on agricultural subsidies have been transformed into a conflict centered on the US and China. The US, as the world’s largest agricultural exporter, is eager to restrain China’s subsidies and insists that it will only agree to stricter rules on its own subsidies if they also apply to China. But China has refused, insisting that as a developing country, it should be exempt from any new restrictions on subsidies. The US has been unable to force China to accept disciplines on its subsidies, leading to a stalemate. While reducing trade-distorting subsidies remains a pressing concern for developing countries, efforts to negotiate new and strengthened disciplines at the WTO have been paralyzed by an impasse between the two dominant powers, heavily shaped by the hegemonic rivalry between the two states. China, along with the US, is now blocking pro-development reform of the trading system at the WTO.

This chapter analyzes China’s impact on the global governance of export credit. For decades, the OECD Arrangement has been held up as a successful example of liberal trade governance, with its system of disciplines proving highly effective in preventing a destructive, competitive spiral of state subsidization via export credit. I show, however, that the rise of China has profoundly altered the landscape of export credit and disrupted its governance arrangements. China has emerged as the world’s largest provider of export credit, but China has refused to join the Arrangement and it has persistently thwarted efforts to negotiate a new set of international rules. China has little incentive to agree to disciplines on its use of export credit, which plays a central role in its development strategy. Despite considerable US pressure, China has refused to capitulate and subject itself to international disciplines that it views as fundamentally against its interests. China has shown that it has sufficient power to stand up to the US in defending its development interests. Yet the result, I argue, is that China’s rise is undermining the liberal regime for governing export credit by eroding the efficacy of existing disciplines and blocking efforts to construct new ones.

This chapter introduces the central argument and themes of the book and situates its contribution within contemporary debates regarding the rise of China and its impact on global economic governance. The book challenges two key prevailing views: (1) the US maintains its dominance in the international system, with China too weak to pose a serious threat to American hegemony; and (2) a rising China can be integrated into the US-led liberal international economic order. I argue that an important aspect of US hegemony to date—its ability to lead or dominate global institutions—has been severely undermined by the rise of China. If the US once “ran the system,” this book demonstrates the extent to which that has now been disrupted. China’s emergence as a counterweight to US power has sharply curtailed the US’s institutional or rule-making power. The US and China are engaged in a struggle over the rules of global trade, with each seeking to shape the rules to reflect and advance its interests. China has refused to defer to American power or simply be a rule-taker, but instead has repeatedly blocked the US from obtaining its objectives. US–China conflict is profoundly undermining global trade institutions and rule-making.