Academic journal article International Journal of Comparative Sociology

Global Transformation and Local Countermovements: The Prospects for Democracy under Neoliberalism

Academic journal article International Journal of Comparative Sociology

Global Transformation and Local Countermovements: The Prospects for Democracy under Neoliberalism

Article excerpt

Introduction

The second half of the twentieth century witnessed the beginning of a major transformation of international political economy, a sea change that continues to play itself out in the name of globalization. We stand at the center of these events, without a clear understanding of their outcome but with a palpable sense of the changing shape of our world. In many ways, our epoch is comparable to Karl Polanyi's "great transformation" that began with the rise of an international market economy and ended in fascism, war, and the collapse of nineteenth century civilization. The comparison is twofold. First, nineteenth century liberalism and twentieth century globalization each in its time reorganized the international capitalist system in new ways, initially through imperial rivalry and then by means of a global regime. Second, by extending the market economy to new terrain, each regime introduced contradictions revolving around social protection and currency. In Polanyi's language, these "disruptive strains" fostered "countermovements" or defensive reactions intent on saving society from the destructive effects of unfettered market competition. Without prejudging the direction of contemporary events, Polanyi's classic The Great Transformation provides a fertile model for analyzing today's global society.

The late twentieth century pivots on the creation of a new international system designed to promote stability and economic recovery at the end of World War II through the Bretton Wood accords. A Third World was created under the tutelage of the industrialized states, a world that was to be blandished and instructed in the ways of development. Economic growth was the object, a goal attainable through open markets, trade and aid, foreign investment, and coordination by an active developmental state.

In this paper, we analyze the state and social movements in the developing world. We are concerned with developmental policy, the limits of state autonomy, and the prospects of democracy. These themes require that we sketch the evolution of the developmental state--its political principles, moral economy, accomplishments, contradictions, and effective demise with the debt crisis of the 1980s. Our problem suggests several contemporary parallels with Polanyi's analysis. The debt crisis and subsequent austerity policies implemented by multilateral agencies of the new global regime were a classic effort to save the market economy from its own contradictions. Disruptive strains fostered in the process centered on currency devaluations and deteriorating social protections. Similarly, these events generated an international wave of countermovements, cases of popular protest and mobilization originating from a common root but manifest in varied societal forms. The countermovements begin in a strikingly similar set of popular uprisings beginning in the 1980s, an international wave of street riots protesting austerity policies identified with the International Monetary Fund. Although riots and demonstrations continued episodically, new forms of political mobilization began to emerge and supersede the premises of the developmental state. It is these emerging practices that we hope to illuminate.

In the sections that follow, first we describe the transformation in general terms, how it has been described and theorized. Then we turn to two case studies of political conflict: social movements around globalization and democratization in Mexico and India. The case studies focus on two of the world's major developing countries, yet ones that differ in their histories and paths to modernity. They are selected for comparison in the interests of variation, in order to show in detail the different avenues along which globalization and its countermovements proceed. In the end, we also propose certain similarities between these cases as well as some lessons for the unfolding transformation.

Theorizing the Politics of Transformation

Polanyi (2001) traced national trajectories through the great transformation as they were shaped by strains and countermovements associated with social interventions in the market, "the measures which society adopted in order not to be, in its turn, annihilated by the action of the self-regulating market" (Polanyi 2001:257). Fascism developed in Europe on the promise of curbing the inflation that had deadlocked postwar democracies. Conservative governments adopted austerity measures in England, while drastic devaluation by means of economic depression "saved the United States from a social catastrophe of the Continental type" (Polanyi 2001:238). Nations inevitably faced crises arising from the socially destructive effects of self-regulating markets, but the manner in which crises played themselves out varied. Although his analysis brims with insightful observations, Polanyi did not systematically theorize the conditions associated with one trajectory or another. Contrasting outcomes emerged from the societally contingent interplay of events and political forces.

Contemporary theorists grapple with the "Polanyian Question" when they address the social and political effects of global transformation at the turn of the twenty-first century. Their analyses begin with a characterization of the international scene and the question of what is new about globalization. For present purposes, globalization is not an accomplished fact but a process that began in the 1970s and continues to work itself out. It is a new international regime that governs, with varying degrees of success, the economic and political relations among world states and populations. The regime consists of three components. First, it is a coordinating institutional complex of multilateral organizations, notably the International Monetary Fund, World Bank, and World Trade Organization, linked to member governments, international banks, and private associations such as the World Economic Forum. Second, the regime is orchestrated by a set of neoliberal policies that promote market economies, free trade, unimpeded capital and investment flows, and elimination of obstacles to open markets such as labor codes, environmental protections, and state subsidies (e.g., of food). Governments and institutions that constitute the globalizing regime sometimes differ sharply on the substance and implementation of neoliberal policy, but their differences concern how, not whether, to foster globalization. Third, globalization, like its predecessor development, is an uneven process over time and space. It moves by fits and starts. States are incorporated in different forms and degrees. Contentious politics appear at these uneven junctures. Stress on the processual nature of globalization admits some of the objections of "global skeptics" (e.g., Hirst and Thompson 1999) about the originality and rate of recent developments, but insists upon directional change along the above lines.

Neoliberal globalization generates a distinct configuration of winners and losers in the political arena. Power shifts in the direction of multinational institutions and corporations. International bankers, exporters, regionally differentiated and integrated businesses, and electronic financial services are among the winners. Potential losers include welfare states, weak exporter countries, labor, environmental interests, middle-classes in national enterprise, and notably the urban poor once incorporated by the developmental state. Contentious politics may arise in any of these settings depending upon particular combinations of circumstance which we propose to identify. Anti-globalization countermovements assume varied forms but support one broad claim. The developing world has experienced a sea change in the role of government, the aims of development, its winners and losers, its privileged policies and popular entitlements, and in the moral economy that suffuses this world. Something new is afoot in the globalizing world and in the notions people have about their situations.

The contemporary parallel with Polanyi's emphasis on social protections and the purview of market intervention is the rise and fall of the developmental state. Throughout the developing and former colonial world the postwar years witnessed the creation of new states and the expansion of older ones for purposes of economic development. Industrialized countries around the world turned to the decolonizing states for geo-political allies and trade partners. Indeed, the "Third World" was formed in this context of Cold War rivalry, multilateral sponsorship, development assistance, and economic incorporation. Developing country governments began to invest in their own economies and regulate them in the interests of planned growth. State-owned enterprises were established to help direct this process, provide economies of scale, assure the development of essential industries, and deal on an equal footing with multinational firms. Planned investment included large infrastructure projects--dams, roads, reclamation, electrification, and ports. Most important, the new "developmentalist state" (Cardoso and Faletto 1979:143; McMichael 2000:39) was distinguished from earlier state forms by its strategy of social intervention in support of the social wage, public ownership, central planning, social security, health care, workers' compensation, minimum wage, and trade union rights. The developmental state was capitalist and dependent on trade and aid from Western industrial nations, but it also attempted to husband national capital in a set of policies that included import-substitution industrialization, capital and exchange rate controls, industrial protection, and joint investment ventures (Cardoso and Faletto 1979; Rueschemeyer and Evans 1985; Migdal 1988).

During periods of economic growth and generous international lending, developing countries successfully maintained the welfare state apparatus. Many Latin American states, for example, adopted national health and social security programs. States weathered oil price shocks and recession in the 1970s by borrowing heavily to support public services and popular consumption. External debt soared, requiring new loans to pay old ones. By the early 1980s, when the international financial system recognized the debt crisis, workers and citizens had become accustomed to basic state guarantees. Over the course of a generation, a moral economy of the poor had evolved on the premise that hard work and political loyalty were rewarded by housing and employment opportunity. A social pact was created between the state and low income groups based on patron-client exchange. Developmental state regimes supported collective goods and services ranging from land and housing to subsidized food and public employment, all premised on political stability. The social pact prevailed in most instances, although developmental states were not averse to repression when demands outpaced the ability to satisfy too many constituents at once. The poor majority owing to a combination of force and favor tolerated social inequality and official arrogance. But the system was predicated on reciprocity among interacting participants--stable under the conditions described, but also delicate.

The developmental state and its social pact with low and moderate income urban groups collapsed with debt crises and austerity programs beginning in the early 1980s. On one hand, states lost the financial capacity to support extensive social welfare programs and public employment. On the other, IMF-designed and internationally sponsored structural adjustment programs (SAPs) required, as a condition of loan renegotiations, that states dismantle precisely the apparatus that made them developmental states. Theoretically driven, broadly conceived, and universally applied to debtors irrespective of particular national conditions, SAPs quickly evolved into a neoliberal policy regime backed by strict conditions and sanctions--a new orthodoxy about how errant debtors should clean house and re-embark on the development path. The decade of the 1980s came to be characterized by the neoliberal development orthodoxy.

Structural adjustment programs included a standard set of reforms the acceptance of which, in effect, qualified debtor countries for negotiated bailouts and rescheduled loans. Aimed at reduced government spending and elevated export earnings, the typical SAP demanded: currency devaluation, cuts in public employment and investment, elimination of food and transportation subsidies, wage restraint despite inflation, higher taxes and interest rates, privatization of state enterprises, reduced protection and greater access for foreign investment. In theory, this combined "shock treatment" would stimulate efficient markets and generate surpluses for application to the public debt. In practice, however, structural adjustment produced mixed results with regard to economic growth and regressive consequences for the urban poor and working classes. Price increases followed cuts in subsidies for basic foods, public transportation, state services in education, and health. Devaluation favoring exports elevated import costs including a significant portion of the typical basket of goods consumed by working and middle classes in cities. Privatization and reduced government spending led to increased unemployment. Real income fell dramatically, as much as 30 to 40 percent in some countries. The share of national income going to labor dropped and income inequality increased. Living standards declined including such critical measures as calorie consumption and infant mortality (Pastor 1987; UNCTAD 1989; UNICEF 1989). The moral economy, on which political stability had rested, collapsed with the debt pyramid introducing a new era of contentious politics on a global scale (Walton and Seddon 1994).

The advent of an international austerity regimen in the mid-1980s met immediate and far-reaching political resistance. The directly-affected, urban poor responded with a global wave of street demonstrations, general strikes, and price riots aimed explicitly at the austerity measures imposed by international agencies and their own governments. For perhaps the first time the world witnessed a global uprising, "IMF riots," an international protest wave beginning in 1976, peaking in mid-1980s, and continuing to the present (Walton and Seddon 1994; Woodroffe and Ellis-Jones 2000).

Contemporary theories of global transformation and its political consequences divide into two broad alternatives. First, the theory of state retreat argues that globalization is essentially a process of extending market society, multinational enterprise, and international finance into new and formerly public arenas. The domain of state authority has narrowed in both the state's capacity and its legitimacy to intervene in society. The retreat of the state entails a decline in popular sovereignty, weakened democratic institutions in the face of corporate power, reduced scope for their effective operation, and compromised legitimacy in the eyes of the governed. Globalization takes political power out of the public realm and reallocates it to a global ruling class insulated from popular accountability in ubiquitous corporations and international organizations. Although the theory is applied at many levels of the world system, it dovetails neatly with political analyses of developmental state decline and neoliberal regime ascendancy in the former Third World (Strange 1996; Sassen 1996; Castells 2000).

Second, the theory of movement insurgency argues that global transformation has created the conditions of a new, diverse, and increasingly effective anti-globalization movement. On one hand, the new movement is fueled by grievances stemming from the elimination of state protections and growing market competition. On the other hand, insurgency is mobilized by new international organizations and their coordination by new technologies. In the developed countries a new coalition of labor, environmental, human rights, and women's groups acts on many fronts. Grassroots organizations in developing countries form alliances like People's Global Action in which the problems of poverty, women, and the environment are one. Campaigns to save the rain forest and ban the global sweatshop reach across borders. Against the contested meetings of the World Economic Forum a World Social Forum organizes popular forces. Although the movement may be in its early stages, important gains have been registered by the Seattle WTO protests, the Nike campaign, Reclaim The Streets, and countless struggles against privatization in poor countries (Keck and Sikkink 1998; Klein 1999; Evans 2000; Went 2000; Dickinson and Schaeffer 2001).

The purpose of this paper is to examine contemporary movement insurgency in a focused comparison of global transformation and political response in India and Mexico. This is a comparative case study designed to discover certain general properties in the experience of globalization as well as explanations for divergent paths. We hope to ground current theorizing in solid case studies and, then, to suggest some plausible interpretations--to move the discussion along on a better footing. We compare two important continental powers, states that represent many of the strains of globalization in Asia and Latin America respectively. Both have enjoyed remarkable achievements of modernization, yet struggle with persistent poverty and uneven development. India and Mexico are continental bellwethers. Moreover, like much of the developing world, they are struggling democracies: Mexico, the long-time, one-party state and managed democracy that has only recently achieved a competitive system; and India the established multiparty parliamentary state, which is nevertheless threatened by regional strife and radical nationalism. These two continental powers differ as a result of their colonial traditions (Spanish vs. British), trajectories of dependent development, method and timing of political independence (1820s revolution and 1940s anti-colonial movement), and contrasting cultural heritages (Aztec and Mogul). In contemporary terms, India and Mexico provide divergent models of globalization: Mexico the first defining case of the debt crisis and model of intervention by the IMF structural adjustment regime; India a case of belated intervention and economic reforms. Both nations represent variations of the developmental state (Evans 1995) and provide a fertile case study comparison of the politics of global transformation. In short, our comparison deals with two major developing countries, representing separately, the Asian and Latin American experience yet confronting globalization from different world-historical positions. The comparison will allow an evaluation of the generality of political responses to globalization, on one hand, and the pursuit of a case-study strategy of "variation finding" (Tilly 1984) on the other.

Mexican Democratization

Mexico's economic crisis that began in 1982, ushering in a neoliberal reform regime, also facilitated a movement of democratization. The explanation for this somewhat paradoxical development lies in the interplay of national and international forces. From the international side: structural adjustment programs have weakened former mechanisms of state co-optation and coercion, neoliberal ideology supports a limited bourgeois state, post-Cold War geopolitics no longer depend upon stable authoritarian states, and global competition for capital compels states to pursue democratic harmony and investor stability. From the national standpoint: less developed countries constrained by fiscal austerity can no longer afford clientalism, greater popular sovereignty is a condition that citizens expect in exchange for austerity, civil society thrives under these conditions, and new social movements for democracy rise to the structural opportunity (Walton and Seddon 1994). Democratic practices that satisfy these conditions may not be broadly representative and inclusive. Democratization refers more specifically to increasing access of the governed to the governing process, mechanisms for reaching consensus among the governed, and rule of law. The argument here is empirical rather than normative. It rests on the affinity, noted by Max Weber (1958), between capitalism and laissez-faire government.

Turning to the evidence, democratization is of course a movement of long historical pedigree. In a new periodization of "waves of democracy," Markoff (1996) notes eighteenth and nineteenth century revolutionary state formations and then focuses on the much more democratically eventful twentieth century. Three periods appear: a "democratic surge" from 1910 to 1925 (in postwar Europe and Mexico, Turkey, Japan, etc.); followed after a hiatus by post-World War II freedoms in Europe and the decolonizing world (e.g., India); and finally what Markoff (1996:80) calls the "newest and greatest wave of democratization" beginning in the 1970s and continuing to the present marked notably by new popular regimes in Eastern Europe, Africa, and Latin America. Closer observation supports this conclusion with recent developments at the regional level. According to Lubeck:

   A revival of popular democratic participation expressed in
   food riots, strikes by workers, and demands by professional
   and middle class for elections [which one author calls]
   "Africa's second independence" ... Indeed, an astonishing
   number of popular movements have arisen to demand political
   change in one-party states ranging from Madagascar,
   Ivory Coast, Togo, Benin, Cameroon, Mali, Kenya, Zambia,
   and Zaire [that] represent the emergence of a new generational
   force demanding democracy, human rights, and the
   resolution of economic and social crisis. (Lubeck 1992:536)

The wave of democratization movements continues. By the mid-1990s, Lubeck's African list could be extended to include Niger, Algeria, Nigeria, Ghana, and South Africa. Important movements appeared also in Asia (Philippines, Nepal, South Korea, Thailand, Bangladesh, East Timor, and Indonesia) and Latin America (Haiti, Mexico, Venezuela, and Guatemala--all after 1980s transitions from authoritarianism in Brazil, Chile, and Argentina). The summer of 1997 witnessed surprisingly parallel protests in support of democratic elections and against constitutional manipulations of the franchise in Peru, Kenya, and the Philippines. In 2000, Indonesia replaced decades of authoritarian rule with its first elected government and Mexico ousted the system of one-party rule that had contained democratic practice for seventy years. These are the events that give rise to claims about a new global politics and the theory of movement insurgency.

Mexico is an instructive case of democratization, combining long-term secular trends with contemporary neoliberal politics. In 1929, the Institutional Revolutionary Party (the PRI then under a previous name and acronym) consolidated power after two decades of revolution and post-revolutionary caudillo (regional strongman) rule. The PRI thoroughly dominated elections for the next thirty years as parties on the right (National Action or PAN) and left (popular and socialist, PP and PPS) offered only sufficient opposition (often with PRI support) to justify Mexico's claim to democracy. In presidential elections of the 1950s, however, opposition parties turned out significant numbers. During the 1960s, the combined opposition vote for federal positions averaged ten percent, state and municipal contests became even more competitive with occasional PAN victories and, more importantly, opposition-party support correlated with growing forces of economic development and urbanization (Reyna 1971; Walton and Sween 1971). The trend was accelerated when federal police brutally suppressed the student movement in 1968. By the 1970s, government was generally unpopular, widely perceived as corrupt (Mexican presidents and their retinues routinely left office with fortunes), and politics was understood as a cynical power game. Electoral opposition mounted with PAN candidates winning local office and seriously contesting provincial governorships.

Mexico's debt crisis, officially pronounced in August 1982, produced political shock waves domestically and internationally. Globally it confirmed a pattern of profligate lending that far exceeded foreign exchange reserves, not only in fragile economies, but also in a number of Third World development models and petroleum exporters, like Mexico. Internally the crisis and ensuing neoliberal reforms went to the heart of Mexico's one-party patronage state. Devaluation elevated prices of many basic goods in an economy that had long subsidized urban consumers' taste for imported products. Direct subsidy cuts threatened the safety net of cheap staple foods and healthcare. Reduced public spending eliminated government jobs and contracted construction work. As a result, in the mid-1980s wages declined by thirty percent and as much as forty-six percent in construction, the most important source of jobs for poor people. Prices rose far outpacing adjustments in the minimum wage. Whereas in 1982 the basic market basket of twenty-two foods required fifty hours of labor from the average worker, by 1986 it had risen to eighty-five hours (Tello 1989; Lustig 1992).

Dramatic political changes followed. Mexico experienced relatively few austerity protests or IMF riots. Some did occur and were forcibly suppressed or silenced, but Mexican dissent was more characteristically expressed through organizational networks. A national campaign protesting the high cost of living sponsored marches, boycotts, and hunger strikes (Carr 1986). The Urban Popular Movement (MUP) confederation was organized in cities around the country to fight against rent and price rises (Moctezuma 1984; Ramirez 1989; Bennett 1992). Reflecting this mobilization outside institutional channels, popular discourse became suffused with claims on behalf of "la sociedad civil," the emergence of a new civil society (Coulomb 1991). Analysts began to suggest a developing relationship between state retreat and popular action, perhaps even democratization (Selby and Browning 1999).

Institutionally the key change came in 1987 when Cuauhtemoc Cardenas, a popular PRI governor and former president's son, broke with the official party to form the Democratic Revolutionary Movement (PRD). Running for president in 1988, Cardenas mounted a populist campaign attacking PRI corruption and the inequalities of neoliberal policies implemented over the previous six years during the administration of President de la Madrid. If Cardenas did not win an outright majority in the election, critics on various sides agreed he received more votes than PRI candidate Carlos Salinas. Nevertheless, after a mysterious delay in the computerized vote count, official figures showed a 50.1 percent majority for Salinas, 34 percent for Cardenas, and the balancing going to PAN and a few minor parties.

Ironically, what became known as Mexico's most fraudulent election was also perhaps its most revolutionary. Although the new Salinas administration perpetuated corruption at high levels, it responded to challenges to its legitimacy with a series of party, constitutional, and electoral reforms including an autonomous institute that would manage future elections. Six years later, Salinas's successor Ernesto Zedillo was chosen in a relatively free election (after the assassination of a reform candidate). Cardenas lost the high ground in his second presidential bid but PRD and PAN made further inroads at the state and local levels. The western state of Jalisco and Mexico's second city Guadalajara elected a PAN governor in 1995, while in neighboring Guanajuato state Vicente Fox won the governorship in route to national prominence. In a masterly campaign five years later, Fox won the presidency on the PAN ticket with 46 percent of the vote over PRI at 33 percent and the fading Cardenas with 16 percent. Equally important, the unprecedented opposition victory in the presidential race was matched by successful PAN and PRD candidates for the federal congress. At the state and local levels, half the nation's population was now governed by PAN or PRD administrations, up from just 12 percent of the population in 1988 (Guillermoprieto 2000).

Now in its fifth decade, the struggle for democracy in Mexico is far from complete despite recent gains. Above all, it has been a gradual and segmental process paced by social structural changes reflected in urbanization, economic development, and globalization. It is a movement in space as much as in time--from bottom to top, local to national, and distant province to metropolitan center. Building on earlier gains, democratization received a unique set of stimulants beginning in the 1980s and generating unprecedented changes in a relatively brief period of crisis and reform. Four factors combined to produce this result.

First, the languid pace of Mexican democratization was jolted forward by the debt crisis of 1982 and all that it represented for failed development policies and institutional morbidity. Among many ailments, government had become over-dependent on a crash program of petroleum export to meet distorted foreign exchange requirements. Productivity and private investment (including foreign) declined while the state supported an artificially high standard of consumption with international borrowing in an effort to maintain its legitimacy. The crisis hit hard and persisted long owing to neglect of its deepening causes. Large numbers of middle- and working-class people began to re-examine the clientist bargain they had struck with a state now unable to deliver the goods.

Second, new and renegotiated loans that saved the state from bankruptcy came at the cost of punishing IMF structural adjustment policies. And austerity was devastating for the one-party developmental state whose legitimacy and political organization rested on patronage. Third, the state introduced a set of democratic reforms in order to meet lender conditions and maintain citizen loyalty. Political reform was urged by foreign supporters (e.g., U.S. congressional representatives vulnerable to criticism for their costly assistance to a country that represses its own independent labor movement or jails its opposition) and by progressive domestic leaders who argued that the government had to make political concessions to its long-suffering citizens. In one of the more insightful analyses of these events, PRD leader Porfirio Munoz Ledo observed, "this government has to understand that it cannot move forward with an economic opening of the country without a political opening as well" (New York Times, October 7, 1992).

Fourth, the political opening was created at the intersection of state reforms and energized civil society. The political system offered important concessions including fair elections and less restricted participation. In 1992, President Salinas actually reversed several state governor elections in which protestors accused his party of fraud. More important, popular organizations mobilized to demand political openings and to exploit those offered. Openings were made, not given. The Urban Popular Movement (MUP) formed grassroots groups demanding solutions to the growing pain of structural adjustment. The Mexican Academy for Human Rights advocated for forgotten indigenous people while Allianza Civica challenged corruption. Diverse elements of the civil society (the church, students, professional associations of architects and engineers mobilized to claim the political space formerly pre-empted by patron-client arrangements. In fact, Mexico's corporatist state had encouraged dense, if co-opted, organizational networks in civil society. Now, in effect, that network found the need, opportunity, and means to organize independently.

Mexican democratization is a social process extending far beyond electoral reform. In economic crisis, faced with a collapsing developmental state and the exhaustion of clientism, people turned to alternative organizations of the civil society as their means of expression and action. The insurgent electoral opposition dramatically demonstrates the articulation of civil society and institutional transformation. Vicente Fox's PAN is not the old Catholic-right, reactionary-business party, but a neoliberal, populist reform movement. Yet the regime inaugurated by electoral reform has shown a marked inability to break the bureaucratic grip of clientism or advance new policies independent of the neoliberal consensus. On the contrary, Fox embraces NAFTA, wants more of it (an open border opposed in the United States), and continues to pursue austerity policies that constrict the field of state intervention. Economists report growing inequality and a shrinking middle class, "a sorry outcome for a nation that adopted the economic tenets of globalization as gospel ... particularly bitter for the middle class, the very people who powered the rise of President Vicente Fox" (New York Times, September 4, 2002).

We discover, then, a Janus-faced Mexican democratization, a vigorous challenge to seventy years of one-party authoritarian rule, yet a movement that has so far done little to reclaim popular sovereignty or reverse the regressive social effects of globalization. Things might have been different had Cardenas and the PRD consolidated electoral victory in 1988 when structural adjustment was in disrepute and the public was mobilized by a mildly leftist agenda. Yet Cardenas proposed no clear alternative program at the time. Any substantive change in the policies adopted since 1982 would have involved reinforcing the state's capacity for intervention and social protection, a return to the days when Mexico nationalized its petroleum and reformed its land. By that standard, the theory of state retreat is confirmed in the Mexican case. At the very least, we are forced to conclude that even broad-based social reform movements are insufficient means for effectively challenging globalization. Theoretically, we are presented with movement insurgency and state retreat.

India's Neoliberalism

Like Mexico, India's experience with neoliberalism has ushered in substantive transformations. The process of deregulation, double movements, and fascist advances make India a textbook case for Polanyi's arguments about the fallacy of unregulated markets. Market reforms, introduced in India in 1991, augured a sharp break from the secular, developmentalist, and clientalist politics of the past. In fact, 1991 was a key year and so significant are these reforms that they delineate India's post-independence history into pre-reform and post-reform phases. A nation with a stable democratic system with a regular election cycle has given way to a politically volatile situation where five national governments have occupied office in an eight-year period (1991-1999). Broadly then, India's experience with neoliberalism is characterized by three unique developments. First is the emergence of a weak form of fascism as seen in the rise of Hindu nationalism. A second interrelated development is the reconstitution of civil society where radical movements of the 1980s were superseded by the pursuit of unrestrained consumerism. Finally, self-protectionist movements, rooted in pre-reform and colonial-era politics, routinely disrupt the economic reform process. The scale and repertoire of these movements have a larger global reach: some of them like the farmers' movement have founded and inspired countermovements that organized protests against international free trade in Seattle and Washington D.C. in the United States.

The explanation for this three-fold development lies in the interaction of internal conditions and international forces. Internally, the collapse of the developmentalist state created a political vacuum that facilitated the emergence of radical nationalism and fragile ruling coalitions. The developmentalist state was associated with the Congress Party's ability to obtain a modicum of stability with a well-established political network of patronage. As a national level party, it was able to incorporate diverse interests into a "Congress system" (Kothari 1967). As the developmentalist state collapsed, so did the Congress system unravel as a system of political incorporation. At the international level, neoliberalism, as a response to international financial crisis, promotes anti-statism that systematically erodes previous modes of political integration and in its stead constructs cultural axioms of incorporation. If the pre-reform phase of post-colonial India is characterized by economic nationalism, then the post-reform period swept in deep and abiding cultural transformations. Of course such cultural transformations constitute the economic and social changes widespread across much of Asia, a phenomenon noted by writer Pico Iyer (1989) who encountered American popular music and Hollywood films in places as diverse as Beijing, Bali, and Mumbai. Such cultural transformations refer to practices of consumption that constitute newly emerging political and social identities and relations within Asia (Pinches 1999). In a sharp distinction to political changes within Mexico, India's experiences with neoliberalism can be best understood within the cultural arena.

India's entry into globalization was unexpected but the crisis that precipitated market reforms emerged from a series of events. International capital flows were disrupted in mid-1991 when India faced a balance of payments problem. The Gulf War of 1990 had contributed to this fiscal crisis when expatriate workers located in the Gulf region failed to send remittances to India. Adding to the shortfall was the government's expenditure of evacuating 112,000 of these workers to India in what is considered the largest civilian airlift in history. Oil prices escalated after the war, and exports to the Gulf, the largest market for Indian commodities, dwindled considerably. Despite borrowing from the IMF, the weak Janata Party-led coalition at the helm of the government failed to resolve this crisis. In early 1991, the annual inflation rate was about 13 percent and the deficit was around ten billion dollars (Denoon 1998; Nayar 1998). When the government fell, a mid-term election swept the Congress party into office as a minority government in June 1991. Meanwhile, foreign banks had reduced India's credit rating, and Non-Resident Indians (NRIs) withdrew their bank deposits. India was reduced to a two-week balance in foreign exchange reserves. By July of that year, the government appealed to the IMF to resolve the fiscal crisis and announced a post-election budget that contained a mix of privatization, liberalization, and austerity measures. These measures came in response to an initial IMF loan of $1.75 billion to bail India out the debt crisis. The Indian government proceeded to devalue its currency in two rounds, which resulted in a reduction of almost 20 percent against the basket of hard currencies (India Today, July 31, 1991).

Thus, from July 1991 neoliberalism was officially adopted as India's state ideology. In a 1996 budget speech, the Finance Minister, Manmohan Singh an Oxford educated doctorate in economics, assured the parliament that foreign-investment had risen from less than 200 million dollars in 1991-92 to nearly five billion dollars (Singh 1996:13). This spectacular escalation in foreign investments within five years of market reforms was procured through amendments to the Monopolies and Restrictive Trade Practices Act of 1969 and the Foreign Exchange Regulation Act of 1973. These amendments eliminated government approvals and increased foreign equity ownership from 40 percent to majority ownership. In the pre-reform period these two pieces of legislation constituted the bulwark of nationalist, developmentalist, and protectionist policies. Indeed, in the decades of the 1970s and the 1980s, and this includes the period of Rajiv Gandhi's import liberalization regime, the public sector prevailed over private industry by a threefold proportion (Rudolph and Rudolph 1987:25-27). While the process of debt crisis, IMF intervention, and market reforms in India did not produce international political shockwaves as Mexico's did in the early 1980s, internally it generated a mixed reaction. Elation about the freedom from excessive regulation and the promise of increased consumerism after decades of nationalist austerity combined with large-scale resistance against the loss of state patronage to produce three striking developments.

First, the 1991 reforms created an opening for the gradual expansion of radical nationalism in politics. The rise of the Bharatiya Janata Party (BJP) as a form of religious nationalism in the late 1980s, and its ability to head coalition governments since 1998, warrants a closer analysis of the association of neoliberal regimes with fascist tendencies suggested by Karl Polanyi (2001:254). In the 1980s, as the Congress system lay in crisis over developmentalist politics and corruption, the emergence of religious nationalism was facilitated by both political conditions and cultural developments. Ironically, attempts at social reform by a left-oriented, populist government pushed the BJP into the frontlines of politics. This populist government headed by the left-leaning Janata Dal party, in a weak coalition with other left-front parties and a politically nascent BJP, attempted to institute affirmative action policies recommended by the federal government's Mandal Commission in 1990. Under these recommendations, a 27 percent quota at all levels of public education and employment was to be allocated for socially and backward caste groups. This measure was in addition to quotas already set aside for Scheduled Castes and Classes. In a highly stratified nation where the public sector is the main source of guaranteed lifetime employment for the urban middle classes, the backlash was of course large-scale and forced the government to hastily withdraw the implementation of these policies (Corbridge and Harriss 2000). Perversely, the Mandal backlash generated a wider support for the BJP, fundamentally an upper caste movement, just as India embarked on market reforms in 1991.

Yet state support for religious nationalism had emerged in the mid-1980s. The Indian Supreme Court's resolution of the Shah Bano case where Islamic law was upheld in its refusal to pay spousal support to a divorced wife was evidence of the state's abdication from secularist principles. Adding to this general renunciation of secularist principles, the Indian government's economic policy proved fortuitous for Hindu nationalism. In particular, attempts at economic liberalization made during Rajiv Gandhi's regime increased imports in the consumer sector with an emphasis on color televisions and automobiles. In the 1980s alone, almost forty-two percent of urban households owned a television set, and the total number of television sets owned by both rural and urban households was around 176 million (Corbridge and Harriss 2000:124). The emphasis on consumer electronics was significant in shifting policy discourses away from development and poverty alleviation programs to foreground consumption and the middle classes for the first time (Fernandes 2000; Kothari 1993). Media then provided a direction for urban middle classes even as old political institutions and practices were crumbling rapidly.

In 1987, the Hindu epic Ramayana was televised on state-owned media. Earlier, Hindu epics were the subjects of regional films meant for limited audiences, but screening the Hindu epic on national television on Sunday was a powerful, culturally unifying force at a time of rapid social change. Cutting through regional and linguistic differences, the epic mobilized millions of the urban middle classes to support the BJP (Fernandes 2000; Hansen 1999). In fact, Rajagopal (2001:3) proposes that market reform and insurgent cultural politics meshed well together because both sets of rhetoric promised radical change if latent forces were emancipated. It was, as he says, an opportunistic alliance where consumerism and business prospects were elements of both neoliberalism and religious nationalism. In this, both neoliberalism and Hindu nationalism shared technologies to expand markets and audiences, enabled by a deliberate state policy that mediated the emergence of religious nationalism. Consequently, at the beginning of the nineties the BJP was poised to succeed the Congress Party as a national-level alternative and sought political openings for mobilization and expansion. Yet this has not occurred despite religious nationalism's remarkable affinity with market liberalism. Democratization and secularization brought about by pre-reform social movements constitute a countervailing force to prevent the BJP from becoming a national-level political force of the same order as the Congress party (Corbridge and Harris 2000:235-239).

Second, civil society was transformed by the cultural politics of neoliberalism. If the BJP was a form of "elite revolt" (Kaviraj 1997:19) against secularist entitlements, then similar revolts emerged at another level that reconstituted civil society in post-reform India. In sharp contrast to populist movements for radical democracy in the pre-reform period, "elite revolts" can be conceptualized as middle class revolts where decades of nationalist austerity were cast aside for outright consumerism. More specifically, these changes must be viewed in terms of global possibilities and the new knowledge economy. Neoliberalism, as given in the tariff-based WTO regime, provides larger countries such as India a new bargaining status as it enters world markets and embarks on a state policy that is more expansive and ambitious about being a global player (Gordon 1997).

Indeed, this is nowhere as obvious as in its positioning in the global software development sector. An annual survey, brought out by the National Association of Software and Services Manufacturing in collaboration with McKinsey International, projects that India's software exports is estimated to grow from $4 billion in 2000 to $50 billion in 2008 where India now accounts for about 18 percent of the market share in the global customized software market (Indian Express, October 18, 2000). The global information technology industry constitutes a crucial intervention to expand the means of consumption for middle class Indians. It receives considerable support from the diasporic community (Lakha 1999; Saxenian 1999) and recruits its workforce through a well-established network of private, McDonaldized, training institutes. Urban middle classes who play a key role in the cultural politics of religious nationalism are also at the helm of the bourgeois revolution that seeks to re-intergrate India with the global economy. As Anthony D'Costa (1995) explains, private accumulation under state tutelage, growth of public sector firms, and the expansion of the state bureaucratic apparatus at both the state and federal level created a large number of middle class employees with considerable purchasing power. As noted above, by the mid-1980s there was a growing demand from the middle classes for luxury goods and this generated a growing impatience with a state-regulated economy that stifled opportunities to increase consumption. While the source was neoliberalism, the effects were uneven on the intended middle class constituents and mobilized mixed reactions of what Karl Polanyi identifies as a "double movement" Efforts to expand the reach of a market economy also generated a large-scale self-protectionist resistance. As much as the middle classes in India aspire for the consumerist dreams provided by the market, they engage in a resistance against neoliberal policies through routine electoral politics and popular forms of protests such as demonstrations, rioting, and general strikes. Thus, the middle classes do not engage in a simple embrace of the consumerist policies of the market as suggested by some analysts (Fernandes 2000; Lakha 1999), but they at once resist and absorb neoliberalism to challenge political elites and the idea of neoliberalism as well.

Third, self-protectionist movements have punctuated post-reform politics in India and the frequency of general strikes since 1991 (eight over a ten year period) corroborate this finding. The self-protectionist impulse is rooted in the pre-reform civil society of the 1980s, and reaches into nationalist struggles against British colonialism. The cultural politics of neoliberalism redirected pre-reform social movements that had emerged and expanded in the 1980s to pursue radical democracy facilitated by a developmental state. The gradual decline in the Congress party's dominance in Indian politics led to the emergence of the BJP as a political force and, at the same time, led to a resurgence of civil society and a rapid expansion of social movements seeking to fill the political vacuum left by the Congress Party. This decade of participatory politics led to an efflorescence of social movements that ranged from farmers' movements to radical feminist groups. India, in the 1980s, spawned, as Naipaul (1990) termed it, a million little mutinies that had been mobilized by the idea of independence and liberation. These movements infused new significance to the term redistributive development and democracy (Bonner 1990: Naipaul 1990; Omvedt 1993). But the 1991 reforms re-oriented these social movements from a pursuit of radical democracy into self-protectionism.

Nowhere was this reconstitution of civil society more prominent than with the farmers' and the trade union movements as both had accrued significant gains in Indian politics by 1991. These movements had varied economic, geographical, and social origins. The farmers' movements were direct outcomes of the prosperity of the green revolution, making them distinct from earlier peasant insurrections such as the 1960s Naxalbari movement in Eastern India that had focused on caste/class oppression and land reform issues. The farmers, as a new class of rural elites, used repertoires of innovative civil disobedience tactics that captivated the Indian public about alternative politics and radical democracy at a time when the Congress system of corrupt party patronage was rapidly unraveling in the 1980s (Omvedt 1993; Byers 1994; Varshney 1995). Although these farmers' movements were primarily regional, they were united in a loose political coalition as a well-organized electorate by the late 1980s. Uniting the diverse array of regional farmers' movements were their demands for increased entitlements and the elimination of urban bias in state policy. When the government eliminated fertilizer subsidies as part of the 1991 reforms, farmers' groups responded with classic austerity protests by looting fertilizer warehouses and holding demonstrations. Soon their austerity protests were combined with what we could call early anti-globalization protests as many of their protests focused on GATT's proposals to institutionalize global neoliberalism in the World Trade Organization (Udayagiri 1999).

Yet, the institutional changes of 1991 were dissolving alliances within the newly emergent agrarian constituencies because of disagreements over the issue of an unregulated market. Sharad Joshi, a key leader in the farmers' movement in the 1980s who had militated tirelessly for better subsidies and procurement prices, departed from this agrarian alliance to oversee the elimination of agricultural subsidies on behalf of the Indian government (The Hindu, Business Line, November 3, 2000). The Karnataka Rajya Raitha Sangha (KRRS), based in the southern state of Karnataka, soon became the only farmers' group to sustain its pace of initial opposition to free market policies both at the national and global level. This group used outrageous and militant tactics such as destroying a McDonald's eatery, burning Cargill's seeds, and torching Monsanto's cotton fields to oppose the incursion of multinational capital into traditional modes of agrarian production (Udayagiri 1999). Indeed, the case of the KRRS is instructive about the reconstitution of civil society politics in the post-reform period. What began in the 1980s as large-scale demand for a new form of participatory democracy and development from agrarian civil society has led to a political stalemate about market liberalism's implications for agrarian sovereignty. If farmer insurgency continues, it is limited to collective action against global consumerism at the cost of fashioning new constituencies for radical democracy.

Meanwhile, the left front that had expanded its presence in India in the 1980s organized large-scale resistance against market reforms. Consisting mainly of public sector employees who dominate the organized labor force, the left front has been particularly active in the protests against market reforms (Holmstrom 1976; Rudolph and Rudolph 1987). However, the 1991 market reforms forced the left front mass organizations to confront at least two consequences to the reform process. First, there was a sharp turn from the ideological affirmation of the public sector that had significantly boosted left front membership in the pre-reform years. Second, the disintegration of the patronage system of politics under the Congress party necessitated new alliances to be forged that resulted in weak coalitions. This particular political condition catapulted the left front into the front lines of policy making between 1997 to 1998 when it was part of the United Front government. Even as the United Front government reinforced a neoliberal thrust in its Common Minimum Economic Program, it converted the Divestment Commission into an advisory organization (The Hindu, January 28, 1998). Although the Divestment Commission was later elevated into a ministry by a successor government, self-protectionist impulses mitigate the scope of the reform process. The left front, with the Center for Trade Unions (CITU, affiliated with the Communist Party of India Marxist), have organized all the general strikes since 1991 with the most recent held in April 2002. Generally, tens of millions participate in the general shutdown. Such mass participation influences the range of neoliberal policy. The insurance sector is a case in point where it has taken almost eleven years for the government to recommend foreign direct investment of 49 percent (Asia Pulse, September 9, 2002). Yet, this self-protectionism interacts with the cultural appeals of consumerism, which are enthusiastically embraced by the middle classes.

To conclude, India provides an instructive case of neoliberalism in the Global South where a weak form of fascism, rampant consumerism, and militant self-protectionism co-mingle with uneven effects on civil society. Theoretically, post-reform developments in India confirm both state retreat and movement insurgency. The end of developmentalism coincided with the deterioration of a stable system of patronage politics that was dominated by the Congress Party. In the vacuum created by the decline of the Congress Party, civil society erupted in the 1980s seized by the emancipatory ideals of redistributive development and participatory democracy. Social movements had to change direction after the 1991 reforms. A weak form of fascism in radical Hindu nationalism manifested itself decisively in Indian politics and the democratic potential of the social movements of the 1980s was subordinated to the cultural politics of a self-regulating market. Deprived of their customary modes of integration into the political system, these social movements were compelled to use defensive responses against the market through the use of anti-colonial rhetoric, acts of militancy, and large-scale demonstrations. In this process of reconstitution they abandoned much of the democratic alternatives that had guided their movement politics in the pre-reform period. Despite the emergence of religious nationalism and irresistible forms of global consumerism, the pre-reform wave of democratization makes neoliberalism a process of stalemate, paradox, and inconsistency.

Conclusion

The argument developed in this paper may be summarized in a few related propositions.

Globalization as a threefold process in our definition is cause and effect of decline in the developmental state--the retreat of the state from its earlier responsibilities for social intervention and protection. In response, we argue a new form of popular movement politics has infused the international system during the last twenty years as the result of a number of closely related trends toward economic and political restructuring. These trends and events include Third World debt crises, internationally orchestrated structural adjustment programs, expansion of trade and investment under deregulated terms, the rise of global administrative agencies and agreements, and the international popular response to these developments. It is, in brief, an era of neoliberal policies and global countermovements. This does not mean that international-system politics is the only important form of contention in the modern world or that global countermovements are unprecedented. It does mean that new forms of protest have burgeoned from more parochial precedents and that global countermovements are becoming more important in the daily affairs of world populations, including those of the advanced countries once buffered from international inequalities and underdevelopment.

A comparison of Mexico and India is analytically instructive. It reveals at least three broad patterns in the process of market liberalism and state retreat. Firstly, the dominance of the one-party system declined along with the weakening of developmentalism, suggesting that an institutional arrangement of patronage was dependent on developmentalist entitlements. Secondly, key political developments that emerged after an external debt crisis and IMF intervention transformed civil society. Finally, as noted above, countermovements or the double movement for self-protectionism emerged as a strong response to neoliberalism and these responses mitigate the monolithic quality of international financial pressures.

Closer analysis of the two cases reveals variation in these general patterns. If India experienced more convulsive political changes than Mexico after market reforms, it points to larger political implications of a neoliberal state than just those of regime capacity (Nelson 1984). In India the retreat from developmentalism was accompanied by a withdrawal from secularism and it provided an opening for Hindu nationalism. However, large-scale democratization that preceded market reforms created new political constituencies that moderated and continues to moderate the scope and success of Hindu nationalism to remain, at best, as a weak form of fascism. Yet, Hindu nationalism has infused politics and state governance in a substantial manner. In Mexico, while fascism did not manifest itself, paradoxically, democratization followed structural reforms and IMF intervention suggesting the course proposed by Karl Polanyi, that free markets and free governments are co-exisiting phenomena.

Although countermovements have not prevented state retreat, it would be incorrect to conclude that the political complexion of developing countries is unaffected by these changes. The case comparison illustrates the different impacts of globalization. Mexican democratization, and relatively infrequent austerity protests, followed a socially structured path. In a time of economic crisis and political unrest, elements of Mexico's developed civil society turned to electoral politics, which enjoyed extensive reach and symbolic tolerance under the one-party state. India, by contrast, turned to its venerable tradition of social movements fashioned in the anti-colonial struggle. The case studies suggest a pattern in these global countermovements. Actors are confronted abruptly with threats to their well-being; typically economic threats (jobs, wages, subsidies, protections) but also environmental, political, and symbolic threats (environmental depredation, GMOs, corporate power, undemocratic processes). The threatened value in each case is a former entitlement (Sen 1981), typically a form of protection ensured by the state (e.g., food subsidies, labor legislation, environmental protection). That entitlements have been to some extent guaranteed by the state means that they have been won in previous struggles and negotiations, become embedded in the social pact between states and citizens, and woven into the moral economy. Entitlements are more than interests or demands that might go unmet in the political process. They are experienced as rights and their potential loss as injustice. The combination of grievance, injustice, and means or repertoire shapes the pattern of countermovement politics.

Yet the case studies also show the limits of countermovements in the face of global economic restructuring. The decline of the developmental state has created a growing disconnect between state and civil society. Voluntary associations, NGOs, and social movements are energized yet blocked from effective avenues of redress once provided by state development programs or clientist politics. Democratic or electoral politics are open yet indirect, narrow. Representative democracy privileges process over efficiency. Meanwhile, civil society is left mainly with recourse to popular initiatives--soup kitchens to feed the hungry, multiple family occupancy to solve the housing problem, and informal economy to provide employment as in Mexico. In India, on the other band, civil society is simultaneously engaged in self-protectionism and seduced by the possibilities of global consumerism after decades of nationalist austerity. The rise of radical nationalism in India emerges over the politics of market regulation, when the retreat from developmentalism interacted with new modes of consumerism generated by neoliberalism. The theoretical riddle of correlated state retreat and movement insurgency is solved by the realization that we are looking not at some generic form of collective action, but at the survival strategies of people in desperate circumstances.

All this presents a great paradox. Neoliberal economic reforms imply, even require, political reforms. Historically, capitalism is rooted in free labor, state-regulated competitive markets, and bourgeois democratic governance. Global capitalism similarly requires open markets ruled by the neoliberal policies and international agencies (IMF, WTO) as well as representative governments that incorporate citizen-consumers and eliminate rent-seeking autocrats. As the Mexican opposition leader said, "this government has to understand that it cannot move forward with an economic opening of the country without a political opening as well."

The new social pact replacing developmental-state patronage rests on the promise of democratization, and the concerted international effort to promote multiparty states and basic human rights. Yet the new regime also reduces the state's capacity to protect society, indemnifies political expression, and retreats from power. In the nineteenth century, the antinomies of market liberalism and nationalist protectionism resulted in an intensification of interimperial rivalries, the First World War, stalemates over international monetary standards, and the barbaric solutions offered by fascism in the early years of the twentieth century. Reflecting on this at a similar juncture sixty years ago, Polanyi urged that we take up the task of creating abundant freedom for all. That advice resonates with today's popular movements for global justice.

ACKNOWLEDGMENT

Earlier versions of this paper were presented at the Workshop on Contentious Politics in the Developing World, Weatherhead Center for International Affairs, Harvard University, October 13-15, 2000; and "The Next Great Transformation? Karl Polanyi and the Critique of Globalization," University of California, Davis, April 2002. This article draws on a series of studies realized by the project on Global Restructuring and Popular Protest at the Center for Comparative Research, University of California, Davis. Other reports from the project are listed in attached references to the co-authors and their collaborators. The support of the University, Center, and co-workers is gratefully acknowledged.

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Mridula Udayagiri * and John Walton **

* Department of Sociology, California State University, 6000 J Street, Sacramento CA 95819, USA, (Mridula@csus.edu).

** Department of Sociology, University of California, 1 Shields Avenue, Davis CA 95616, USA.

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