Structural adjustment was one of the key themes of economic and social policy in the 1980s in countries around the world. It is likely to continue to be the focus of national and global concern in the 1990s. Much of the discussion on the subject has focused on adjustment experiences at country or regional levels. Likewise much of the literature has tended to compartmentalize the discussion into economic, social or political aspects of adjustment. This has resulted in an excessive emphasis being placed on national conditions and policies as determinants of the need for and success of adjustment measures and a consequent neglect of the role played by world economic forces. It has also impeded an analysis which takes into account the interaction between economic, social and political consequences of these measures.

This paper attempts to provide a global and integrated perspective on the adjustment process which is defined simply as increased reliance on market forces and reduced role of the state in economic management. The essence of the argument advanced here is that structural adjustment is a world-wide phenomenon with an interdependent and mutually reinforcing relationship with the globalization process. The latter refers to increasing integration of the world economies. The processes of adjustment and globalization have generated wide-ranging socio-political consequences. They have contributed through a variety of mechanisms to intensification of poverty and inequalities within and among countries, and indirectly to a range of other social problems. They have also led to important shifts in balance of power nationally and internationally. These shifts have contributed to an increasing gap between power and accountability and resources and responsibility. The result is a growing paralysis in the handling of social problems at the national and international levels. Social problems need to be addressed not only in the interest of national cohesion and solidarity but as a necessary investment for future growth. It is therefore a task of the highest importance to explore the new configuration of social forces and institutional arrangements to meet the social challenges of the 1990s.

The structure of the paper follows the argument set out above. The next section discusses the origin and underlying forces behind the thrust for structural adjustment in different parts of the world. Section III examines the diverse contexts and patterns of adjustment measures in different regions. The relationship between structural adjustment and global integration is analysed in section IV. This is followed by a discussion of some social consequences of the processes of adjustment and globalization. Section VI explores the implications of these processes for power relationships and social democracy.

Given the vast scope of the subject treated here, it has not been possible to provide detailed analytical and empirical support for the arguments advanced in the paper. Rather, the basic purpose of the paper is to set the theme of structural adjustment within the broad context of global economic integration and political and social democracy and to draw attention to some key relationships which have been either largely neglected or insufficiently recognized in the mainstream literature on the subject. In order to make the discussion manageable, it was decided to omit an analysis of the reform process in Eastern and Central Europe as well as in the communist countries in Asia. Their experience nevertheless is extremely pertinent to the issues treated here and raises many points of contrasts and similarities.