Globalization and the widening gap

This essay will be analyzing the perceived benefits and detractors that globalization has on human populations and the planet. The issue of when globalization occurred and how it is defined is the first issue that will be explored as there are a few conflicting interpretations. Many people feel that globalization has had a positive effect on the world by connecting far away communities and expanding business opportunities. Others argue globalization has a negative effect overall because it allows the more powerful nations to exploit foreign populations for labor and resources and gives multinational corporations an unfair advantage over small business. The role of the IMF and the World Bank in the global market will also be explored as these organizations are key regulators of the global economy. This essay will argue that the negative impacts of globalization far outweigh those that are positive and the current system serves the interest of those with the most power and influence at the expense of those without, which is the vast majority. The essay will conclude by exploring ideas that have been put forth as possible alternatives and solutions to the inherent negative effects globalization has on the world populations and environment.
When defining globalization there are several different points that can be made, but overall these different points are all based around the general principle that globalization means integration on an international level. Commonly globalization is a reference to the vast integration of economies and trade policies between formally autonomous states. Usually the economic policies promoted by globalization are liberal in that they encourage economic deregulation and ‘free markets'. Globalization is also commonly associated with the movement of people for labor as well as the movement of knowledge through technology across international borders. Globalization can also been seen as a mechanism that has facilitated the integration of different cultures across international borders that were previously isolated from each other. This cultural integration can also refer an increase in influence of different political ideologies on populations and governments. Certain ideologies and cultures seem to proliferate more because of globalization. "Globalization liberalizes education and supports the proliferation of the English language." (Suryandinata 2000).
It can be still be debated as to when exactly globalization first occurred as international integration is really nothing new. Corporations, governments and entrepreneurs have been making investments and trade in foreign countries for thousands of years. One of the earliest examples of international trade is the Silk Road which connected China and Europe. "From its birth before Christ, through the heights of the Tang dynasty, until its slow demise six to seven hundred years ago, the Silk Road has had a unique role in foreign trade and political relations, stretching far beyond the bounds of Asia itself. It has left its mark on the development of civilizations on both sides of the continent." (Wild 1992). So while it can be difficult to pinpoint a specific date when globalization came into existence, it is easy to make the argument that globalization and international integration has been increasing at a much larger and faster rate in the last few decades then at any other time in history. "Since 1950, for example, the volume of world trade has increased by 20 times, and from just 1997 to 1999 flows of foreign investment nearly doubled, from $468 billion to $827 billion." (CSIS 2007).
Recent advancements in technology with regards to computers and telecommunications has contributed largely to the increasing integration of global markets. Transactions can now be made in a split second, making many of the difficulties of international trade a thing of the past. The invention and expanded use of the world wide web in recent years has also made information much more easily accessible for anyone who has access to a computer. This allows people to find information on what is going on in other parts of the world that would have been previously difficult to obtain. Because of these factors, when using the term globalization, people are usually referring to the increasing and unprecedented economic, technological, cultural, and political integration that has occurred in the last few decades. There are still some who assert that the idea of a structured global economy is impossible because the anarchic nature of the global politics is characterized by crisis and chaos and thus the concept of globalization is largely a myth. (Veseth, 1998). Despite these criticisms, there is no denying that international integration has been increasing.
Once it is understood what the general idea of globalization is, there are questions that need to answered : Is globalization having a positive or negative effect on the populations of the world? Has the increased integration between economies increased or decreased the average citizens standard of living? Who benefits and who suffers from the effects of globalization? Is globalization sustainable? And lastly, are there any alternatives to globalization that would have a more positive effect on the world community?
Globalization has often been promoted as beneficial because of the idea that it increases economic growth and gives the underdeveloped (non-industrialized) countries the ability to raise their standard of living and general quality of life. In a Recent article in Social Indicators Research Tsai (2004) conducted an empirical study (on a macro level) to determine what effect globalization has had on humans quality of life in the time period between 1980-2000. The study data from individual countries to compare the amount of global flows and economic integration with relation to other factors such as each states amount of spending on social programs, political integration or ‘trans-governmental networks', and economic revenue. After analyzing the data it was determined that "The empirical evidence supports the positive effect hypotheses that globalization produces favorable influence on human development" (Tsai, 2004).
While this study shows that globalization has a positive effect on human quality of life, the methodology for reaching this conclusion is not immune from criticism. By using such variables as GDI (gross domestic income) and amounts of social spending to determine a peoples quality of life, the study neglects to determine if these benefits are equal across the state or if they are only afforded to a privileged few. Another limitation that is acknowledged in the study is that "in measuring human QOL, subjective well-being is not used due to data scarcity." (Tsai 2004). Many people may be quick to point out that a persons quality of life is closely connected to the persons state of well-being, much more so than the riches and expenditures of the state they are living within.
Globalization is often seen as positive because it accelerates the growth of a states economy, and increases the standard of living. This view of globalization as an overall benefit to individual states within the world economy is also espoused and encouraged by the organizations and bureaucracies that are responsible for global financial regulation, such as the International Monetary Fund. "Globalization offers extensive opportunities for truly worldwide development...Countries that have been able to integrate are seeing faster growth and reduced poverty...An important transformation is underway. Encouraging this trend, not reversing it, is the best course for promoting growth, development and poverty reduction." (IMF 2002). The IMF not only provides worldwide surveillance on financial development, but also gives policy advice. Furthermore, the IMF has the ability to lend out money to countries who are unable to ‘balance their payments' in the international economy. A request must be made by the particular country to ask for the loan and the IMF is able to choose whether or not accept the request. (IMF 2006). This displays the extreme amount of power the IMF has over a countries ability to function in the global economy. It is not at all a stretch of imagination then to assume that those countries that have not decided to follow the IMF's directions may suffer economically because of the IMF's power in the international economic structure.
While the IMF promotes this lending system as beneficial to countries lower on the economic scale there are critics who provide some convincing evidence that the global economic institutions such as the IMF and the world bank actually perpetuate impoverished states inability to exceed financial debt. Economist Michel Chossudovsky makes a very clear argument emphasizing this point with empirical data to back it up in his book The Globalization of Poverty: Impacts of IMF and World Bank Reforms (1999). He makes the point that countries that were already in debt were forced to turn to the international financial institutions for loans to satisfy the official and commercial creditors.

The debt burden of developing countries has increased steadily since the early 1980s despite the various rescheduling, restructuring and debt-conversion schemes put forward by the creditors. In fact, these procedures when combined with IMF-World Bank policy-based lending (under the structural adjustment programme) were conducive to enlarging the outstanding debt of developing countries while ensuring prompt reimbursemnet of interest payments.(pg. 45).

Chossudovsky (1999) is also quick to point out that the IMF reforms have greatly minimized the cost of labor in many of the underdeveloped countries. This has increased the amount of production to a level of overproduction, while at the same time this reduces the ability of the society to consume. "The consolidation of the global cheap-labor economy on the one hand and the search for new consumer markets on the other. The former undermines the latter." (pg. 17).
So essentially the characteristics of the global economy that are supposedly intended to aid the developing countries are completely contradictory and instead make it even more difficult for them to develop financially. Since the countries are overproducing certain businesses will be unable to export all of their surplus products. This gives the most powerful multinational corporations a huge advantage in the market and makes it very difficult for smaller local businesses to survive unless they are lucky enough to get absorbed into a larger corporation. Taking this into account Chossudovsky points out that the "liberalization of trade invariable leads to the collapse of domestic manufacturing (geared towards the internal market)." (pg. 63).
It appears as though the current global economic structure only really benefits those who already have the most power and economic clout to begin with. The institutions of the IMF and the World Bank while advancing the idea that they are helping undeveloped countries grow financially through integration, instead they are actually increasing the financial divide between the haves and the have-nots by plunging them further into debt at the benefit of those who are already well off. In his book Deglobalization: Ideas For a New World Economy (2004), Walden Bello makes this point very clear when he writes "a more appropriate description of their [IMF, World Bank] role might be maintenance of the hegemony of the system of global capitalism and promotion of the primacy of the states and economic interests the mainly benefit from it." (pg 1).
The mechanisms and current policies regulating the global economy promoting the idea of ‘free trade' have set a framework that ensures that those with most power maintain a monopoly over their competition in the global market. As we see more and more powerful corporations merge, success for small business in the free market becomes a ladder that is impossible to climb.
Another danger caused by the power of multinational corporation in the global economic system is the negative affects that they can have on the populations and the environment for which they are working. Many western-based corporations use their power to extract resources from impoverished areas all over the world. Many of these regions are war torn and very dangerous places to conduct business. Also, many of the local populations in these regions are not pleased with foreign companies coming in and taking their resources and polluting their land. This danger does not necessarily dissuade these corporations from their goal and often they hire their own armies to protect their interests. There are many documented cases of corporations using violence to make a profit, some times even against their own employees if they are not keeping in line as documented in Madeline Drohan's Making a Killing: How and Why Corporations Use Armed Force to do Business (2003). This is yet another example of how the most powerful groups have a monopoly as these types of actions would be unthinkable for a company without vast influence.
An aspect of globalization that is seemingly unrelated to financial integration is the cultural integration that has occurred through the expansion of technology that allows people to instantly connect with one another from anywhere in the world as well as the ability to travel to for away places relatively quickly. This can be seen as beneficial because it gives people the ability to learn about other parts of the world through direct contact and through access of media from other countries that might have been previously difficult to obtain.

Some [media] have taken the opportunities presented by technology to spread over a much wider area. Some newspapers and magazines have used remote printing for international editions. Satellite broadcasters have a potential audience determined by their footprint, not political history. The internet means that media from around the world are available anywhere. (Sparks 2003).

Despite this, it has to be recognized that these technological benefits of globalization are only available for select populations around the globe. There are still millions of people who will never hear a telephone ring in their lifetime, let alone fly in a plane or use the internet. It also has to be noted that only certain media outlets have the financial means to have their media available internationally and most of these powerful media corporations come from a few select countries, mainly the U.S. So while it is often referred to as ‘cultural integration' it could be accurate to described it as ‘cultural indoctrination' because the media that is most available is all coming from the same place, projecting their perspective as the dominant view across the globe. Based on this, it is obvious that technological advancements that make cultural integration possible are unevenly accessible and allow the richer and more technologically advanced countries even more influence on the cultural aspects across the globe.
An example of how globalization has affected cultural groups can be seen in specific case of Malaysia. Globalization was encouraged by Malay leaders after independence, as the western educated bureaucrats managed to gain control.(Suryandinata 2000). This push for a globalization based society meant that Malaysians were faced with deep cultural and economic impacts. "Globalization brought new challenges. Malay nationalism became focused on economic pursuits and created a culture of aggressive wealth accumulation, with a tendency for it to be concentrated within a closed circuit of wealthy Malays." (Suryandinata 2000). Instead of promoting the traditional Malaysian culture, language, religion and education, the globalization driven government promotes a constructed national pride heavily based on the acceptance of government power. This imposed national identity comes off as superficial and has resulted in opposition from the Malaysian people who wish to preserve their traditional culture.
After acknowledging the severe problems related to globalization and the financial regulation institutions one has to wonder if the current system is sustainable. As the divide between the rich and poor nations becomes greater and people start to realize these problems are institutionally ingrained one has to wonder whether there will be a severe backlash once the tipping point is hit. Bello (2004) suggests that the result of this stress caused by globalization is that "military intervention to maintain the global status quo is becoming a constant feature of international relations" (pg. 8).
The one nation that stands to lose the most from the collapse of the current global economic system is the United States. Many will point to the events of 9/11 as an example of this backlash against these types of policies. Others have argued that the 9/11 attacks were orchestrated by elements of the U.S. government to stave off economic collapse so as to provide them with an excuse to use military means to invade foreign countries to secure vital economic resources. While this notion has received little acceptance within academia, there is overwhelming evidence for this assertion documented in such books as Michael Ruppert's Crossing the Rubicon: The Decline of the American Empire at the End of the Age of Oil (2004) as well as Chossudovsky's War And Globalization: The Truth Behind September 11 (2002).
The last issue that needs to be looked at with regards to global economic system is the possibility of alternatives. One of the main features of current globalization is the idea of free trade and privatization. The problem with privatization is that it works against those who don't have resources or who only have very little. Land ownership is often a large factor in who makes the wealth off production. It may be possible to abstain from selling off land to the highest bidder and instead lease it to the poorest sections of a community so it could be used as their own common resource. (Nathan et el 2004). This way the new investment opportunities could be provided to those desperately in need, instead of those who are willing to pay the most. The International Financial Advisory Commission that was headed by Alan Metzer was extremely critical of the functions of the World Bank and IMF. Based on the findings of the commission Metzer proposed that the IMF should institutionalize economic stagnation as opposed to promoting economic growth. He also declared that the World Bank is completely inconsequential to its apparent goal of eliminating global poverty and needs to devolve its loan program to the regional banks.(Bello 2004).
While making specific changes in the currently existing structure have their appeal, and much more easy applicability, the alternative set out by Bello (2004) is much more radical in that it involves the complete dismantling of the current economic structure while at the same time reconstructing a viable alternative. As far as the IMF goes, Bello (2004) sees it as still being useful if converted into a research agency that could monitor global capitol, but without the current policy powers it has today. While advocating the dismantling of the current global economic system Bello (2004) is not talking about withdrawing from the international economy. "It is about reorienting economies from the emphasis on production for export to production the local market." (Pg. 113). In our current system much of the food we eat has traveled thousands of miles to get to us when there is plenty of edible produce available locally. This does seem somewhat counter-productive. Other Recommendations made by Bello (2004) include measure of income and land redistribution to, de-emphasizing growth as goal, using democratic choice to decide strategic economic decision instead of leaving it to the market. Another possible solution involves subjecting private and state economies to monitoring by civil society. If these recommendations were implemented it would radically alter the society we live in and there would probably be significant problems with attempting to make this transition even if everyone was in agreement. Even if the transition was made, there would most likely be some unforseen problems that would be faced and disagreements over financial monitoring and how to redistribute the wealth.
The current global economic structure that we have come to refer to as globalization has presented the world with many new possibilities and challenges. Some people feel that they are more connected to the world around them while others are even more isolated. It appears as though the global economic structure affects have a lot more negative effects on the world than it does positive. In general it upholds the current power structure and benefits those in positions of power and wealth at the expense of the majority without. Globalization has also enabled the most powerful cultures to permeate throughout the globe, while many local cultures get lost in the shuffle. Alternatives have been raised, but are not likely to be attempted by those who are benefitting off the current structure. If people were so inclined to give them a chance, it might be worth a try.


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