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Globalization and Social Change

Simon

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The topic of globalization is wide and all-encompassing, it has no easy explanations and comes with conflicting and often hugely ideological differing standpoints from academics, activists, politicians and people. Here Ulrich Beck describes the public discourse that surrounds globalization well: “it has many faces, is full of mystery, all-powerful and it confirms the attitude with which it is approached: fear or hope.” As with any controversial topic, people tend to have very firm opinions of globalization, either it’s inherently bad or good in its nature. But globalization is not that easy to discern, it’s not black nor white, instead it has a more greyish-colour. And perhaps contrary to popular belief, globalization is not a new or modern phenomena, its processes can actually be traced back to six or so main historical waves: such as the spread of world religions and the establishment of the first transcontinental civilizations, European colonialism and imperialism, the First and Second World War and its aftermaths, the mainly politico-military wave during the Cold War, and today’s more financial-cultural wave which is primarily dominated by neoliberalism. Financially, the current neoliberal wave of globalization has, among other things, opened new financial markets around the world, diminished state control of capital markets, dismantled tariffs and other trade barriers, and massive privatizations of various public services and enterprises. Culturally, new technologies have given us high-speed communications and transportations on a truly massive scale and successfully connected people from every corner of the world. This recent historical wave of economic globalization, which has allowed the free flow of capital, but also culture and, to a lesser extent, people across borders, all overseen by international institutions, is probably what most people would describe as globalization.

The effects from globalization on our social life is virtually endless and it cover nearly every aspect of our daily lives. Our jobs, the very food we eat, and most of the things we use and consume in our lives, are the products of an increasingly complex and global production and distribution network dominated by powerful transnational corporations (TNCs). This global shift in our production chains obviously also brings consequences and changes to people’s lives as the location of economic activities changes and jobs are being outsourced and offshored. This problem of globalization is primarily an issue in the developed world. In fact, worldwide opinion polls tend to show that people from developing countries who worry about the negative and uneven effects from economic globalization are more likely to believe that globalization is proceeding too slowly, while people with similar concerns in developed countries say globalization is transforming societies too quickly. There are clearly differing attitudes towards globalization between the developing and the already developed world.

There is no denying that globalization has started to fundamentally change the economic, political, cultural, and legal landscape of our world. Legally, people’s rights and entitlements are no longer solely tied to nation states and citizenship as new and global human rights has emerged. State’s sovereignty is therefore being challenged by international human rights law as various global treaties, agencies, and actors force states to accept their moral obligations towards individuals. Economically and politically, globalization has emerged as a mainly neo-liberal ideology that has started to fundamentally transform the very structure of the global economy, and how it’s integrated and organized into our societies. At the centre of this neo-liberal, free market ideology – often labelled the Washington Consensus – is the belief that the free and efficient market ultimately knows best, and that any interference is undesirable and even harmful.

For these neo-liberals on the right, the major problem with globalization is that it’s not moving fast enough and that the many problems that the world is facing today is simply the result of too little globalization. They believe that once globalization is fully established it will bring the greatest benefits for the greatest number of people. On the opposite side of the spectrum, the anti-globalizers on the left instead see globalization as the problem – with some even calling for the total rejection of globalization in favour of a return to a more “local” world. These anti-globalizers, or sceptics, argue that free and unregulated markets create inequalities that negatively affect the well-being for the majority of people, while at the same time creating massive problems such as environmental and climate degradation on a global scale. As such, they see the globalization of markets as something dangerous as it increases the scale and extent of social, economic, and environmental problems.

David Held, a prominent political academic active in the field of political science and international relations, will here represent the more centre-left criticism of globalization. Held doesn’t reject globalization, instead he calls for a more progressive form of social democratic globalization that is sustainable and capable of addressing the various problems associated with globalization13. While Held and others who hold similar views believes that markets are capable of generating economic well-being, they also warn that markets that lacks appropriate regulation will inevitably result in unwanted problems and risks that are unequally distributed among people and regions. Held argues that it’s not really globalization per se that is the problem, instead it is neo-liberalism and the Washington Consensus that have failed to create a world order that works for all people. Held identifies four major and global areas of political, economic, humanitarian, and environmental crisis that are exacerbating each other and threatening the world. These crises are:

  1. The erosion of the post-war multilateral world order symbolized by the UN and other international co-operations, agreements and agencies.
  2. The collapse of regulations on world trade and trade negotiations that could potentially further worsen global inequality levels.
  3. The failure to live up to the UN’s Millennium Development Goals.
  4. The lack of action against climate change.

These crises, Held argues, are being driven by the specific, and broken, form of globalization that is being forced upon the world by the neo-liberal politics and policies that the Washington Consensus represents.

Central to the Washington Consensus is privatization, free trade, and the free market that when utilized effectively undermines and dismisses the role of governments and strong public sectors – which in the end could severely hamper the capacity of public institutions to deal with local, national and international problems and challenges of globalization. A combination of measures to these three core policies has been the generally accepted doctrine among leading OECD countries and international financial institutions for at least the past two decades. This neo-liberal doctrine has been implemented through various loans and debt rescheduling programs by the Washington-based International Monetary Fund (IMF) and as a policy basis for developing countries by the World Bank. In order to receive vital loans for development programs or during financial crisis, these international institutions require developing countries – but also developed countries as we can see in Greece in recent years – to undergo vast structural adjustments so that their economies can be better aligned to these neo-liberal core policies. But despite being the dominant economic orthodoxy, these neo-liberal policies have failed to reduce poverty levels or generate any sustained and healthy economic growth for affected countries – with Greece and it still ongoing economic crisis being just one example.

Martin Wolf, the editor and chief economics commentator at the Financial Times and author of Why Globalization Works, is critical of this viewpoint and argues that the perspective which Held represent is too gloomy and that globalization should be seen with more optimism. Wolf completely dismisses the fears that we are seeing an erosion of the multilateral world order, arguing that WTO is the most competent and forceful international economic institution ever created. Wolf does admit that the IMF has been weakened, but only because its resources are inadequate for today’s global challenges. And while the UN has always been conveniently ignored by world powers, the institution’s effectiveness has increased since the Cold War, Wolf argues. But one can wonder how true this statement is these days when the Trump administration has announced their intention to cut U.S. funding to multilateral institutions such as the UN. While Wolf strongly believes that international trade is tremendously beneficial to developing countries – just look at the successful development in China – he does acknowledge that there are problems, especially the protectionism of agricultural products by richer countries. When it comes to global poverty, Wolf again argue that we should remain optimistic because real progress is being made. Despite a rapid population growth, extreme poverty levels are shrinking albeit not fast enough, according to Wolf. Statistics from the World Bank shows that while global poverty levels have declined in recent years, the progress is uneven and slow. And while the deadline to reduce extreme poverty by half was successfully met five years ahead of the 2015 deadline, WTO predicts that given the current pace, the world will most likely not be able to end extreme poverty by 2030.

Joseph Stiglitz, former senior vice president and chief economist of the World Bank, argue that thanks to globalization people now live longer and better lives. Globalization, Stiglitz say, has improved the lives of countless of people and increased the standard of living immensely. International trade as helped poorer countries develop their economies much faster than they otherwise would have done. Globalization has also helped reduce the isolation and separation between people, and giving them access to vast amount of new knowledge. Even where there are negative effects from globalization there are often benefits that outweigh the downsides. Despite this very positive perspective on globalization, Stiglitz still seem to agree with much of the criticism against the current form of globalization that Held puts forward. Stiglitz acknowledges that globalization has not succeeded to reduce poverty or ensure sustainable economic stability in developing countries. Globalization, the free market economy, and the elimination of trade barriers, pushed by the West on developing countries, has not produced the positive results and the prosperity which was promised. In many cases, and for most people, it has instead resulted in even more poverty and suffering. The West has driven the globalization agenda at the expense of the developing world, and they have managed to shape its rules so that they themselves will gain a disproportionate share of the benefits from globalization. For example, developing countries have been pushed to eliminate their trade barriers, but the West haven’t removed their own barriers, and thus they have prevented developing countries from exporting their products to Western markets and deprived them from vital export incomes. For Stiglitz, much of the problems related to globalization lies within its institutions. The World Bank, WTO and the IMF have been central at shaping the economic doctrine of the last two decades, and they have been closely involved in all the major economic issues in modern time, finding solutions to financial crises and overseeing the economic transformation of developing countries. Stiglitz argue that it’s clear that these institutions, and especially the IMF, has failed their original missions because of their strict focus on pushing neo-liberal, free market policies as the only viable solutions, no matter the problem or country. Another problem with these institutions is that both the World Bank and IMF are led by representatives from the West – the head of the IMF and the World Bank has always been a European and a North American respectively – and this despite the fact that the majority of their work is done in developing countries. Furthermore, Stiglitz notes that the policies these institutions push are often too closely linked to the commercial and financial interests of governments and TNCs in the developed countries. And in many cases, these interests have disregarded concerns for the environment and climate, democracy, human rights and social justice.

TNCs' production, trade, and investments are done on a global scale, they are therefore in the centre of the forces driving global economic integration and transformation. These activities can result in a lot of public good and development benefits to developing countries. But they could also distort local economies and contribute to environmental degradation, human rights violations, and more. The potential impact from these TNCs on people’s lives and the environment are huge and far-reaching. In fact, the economic power of the ten largest TNCs is bigger than 180 of the poorest nations combined. Despite this, there are no internationally binding instruments to hold these powerful TNCs accountable for the harm they might cause in their daily operations. Currently, TNCs have addressed these issues using various codes of conducts or CSR (Corporate Social Responsibility) initiatives. Obviously, these policies have resulted in positive benefits and change, but they are still only voluntary measures which can be easily disregarded and comes with few or no penalties. To combat this, there needs to be a strong multilateral world order with institutions that are capable of enforcing transnational legal frameworks that applies to TNCs, as well as governments. The first steps towards such international binding regulations that hold companies accountable and ensure justice for victims are actually being taken. In 2014, the UN Human Rights Council (UNHRC) adopted resolution 26/9 – despite objections from France, USA, Germany and other industrial nations – which calls for the elaboration of an international legally binding instrument on TNCs to ensure their compliance with human rights.

While progress is slowly being made to combat the many challenges and issues related to economic and political globalization, the question is, will it be sufficient? The current form of globalization that predominately only benefit the already rich and powerful cements the huge inequalities and grows disbelief and angers among people towards a multilateral and multicultural world order.

If markets are left on their own, without any kind of regulation or government oversight, to decide possible solutions to problems and challenges related to globalization, economic creation and distribution, it will only risk to prolong many of the political and economic difficulties both developing and developed countries faces. By weakening the capacity of governments and the public sector in favour of market forces and privatization, the many difficulties that the poorest and most vulnerable people – no matter if they live in either the North or the South – already face will be worsened as societies cut back on the very services which has previously offered them protection and relief. Unregulated economic development will never fully reach prosperity for all, it will only benefit a small minority and the powerful corporate interests that are already deeply engrained in the global economy. Likewise, international trade will never be able to help combat poverty in developing countries and improve the well-being and welfare of people in all corners of the world as long as the current rules of globalization and global trade continues to protect the interests of the already rich against both the poorest countries and many middle income countries. Free trade must take into consideration the huge power asymmetries between countries in the global economy, and extra attention must be given to the people in low and middle income countries that are the most vulnerable and the worst affected by the economic transformation of societies from globalization and external market integration, especially capital market liberalization. Even people in rich industrialized countries face similar challenges from globalization and are also vulnerable from globalization when they lose their jobs or see their wages cut in times of major economic shifts. The many inequalities, double standards, and unequal rules, between developing and developed countries, between poor and rich people, that is currently the rule in the globalized world economy cannot continue.

In its current form, globalization is deeply broken for the majority of people. If it’s allowed to continue, there is a real risk that dangerous populists and extremists will use the deep inequalities and the growing public discontent to their advantage and shape a new world order into their sick and twisted image.

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If you want to learn more about globalization and social change be sure to check out these references:

  • Beck, Ulrich (2005) “The Cosmopolitan State: Redefining Power in the Global Age”. International Journal of Political and Cultural Sociology, 18:143-159.
  • Dicken, Peter (2011) “Global Shift. Mapping the Changing Contours of the World Economy”. 6th edition. Guilford Press. Chapters 12-17.
  • Held, David et al. (2005) “Debating Globalization”. Polity Press.
  • Mepham, David (2005) “The Far Side of Globalization: David Held’s Missing Links”, in Held, David et al. “Debating Globalization”. Polity Press.
  • Stiglitz, Joseph E. (2003) “Globalization and its Discontent”. W.W. Norton & Company.
  • Therborn, Göran (2000) “Globalizations: Dimensions, Historical Waves, Regional Effects, Normative Governance”. International Sociology, 15:2, 151-179.
  • Wolf, Martin (2005) “The Case for Optimism: A Response”, in Held, David et al. “Debating Globalization”. Polity Press.

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Yes.I am agree and  like to add as Third world countries are not getting any economic benefits due to globalization.Those who have the money,they get the benefits of capitalism.With this opportunity,the rich and poor people are growing up in those countries due to which violent changes are coming.

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@Pradhan I agree with your comment, the positive effects of globalization are unevenly divided among people, and the rich have successfully created an unfair economic system that only they benefit from. And yes, I think you are right in your prediction, the huge inequalities we are seeing today will only lead us to violence and despair in the near future.

What we are seeing is the free flow of capital while people and labor are increasingly being restricted - which is unsustainable for so many reasons. This really is one of the defining conundrums of global capitalism today.

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