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Globalization is not simply an economic phenomenon

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Globalization is not simply an economic phenomenon

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It is a multi-faceted process characterized by the compression of the world, enlargement of world communication and world market, intensification of social relations, and intensification of the consciousness of the world.

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Economic globalization is a historical process

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Economic globalization is a historical process

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It is an on-going event, a phenomenon that has roots in the past, that continues to happen at present, and will continue to happen in the future.

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Economic globalization is a product of human innovation and technological progress

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Economic globalization is a product of human innovation and technological progress

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Through time, humanity’s progress in technology has revolutionized lives of people. Developments in the field of transportation, information and communication paved the way for globalization.

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Economic globalization is the transformation of economic activities among countries to one of worldwide integration

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Economic globalization is the transformation of economic activities among countries to one of worldwide integration

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Through the removal of regional and national economic borders, the integration of the economies of the world continues into one global economy.

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Economic globalization involves the following interrelated aspects:

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Economic globalization involves the following interrelated aspects:

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Globalization of goods

Globalization of financial and capital markets

Globalization of technology and communication

Globalization of production

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Economic globalization is not internationalization 

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Economic globalization is not internationalization 

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Globalization may have developed from internationalization, but these terms are not synonymous. Internationalization operates respective of national economic borders, while globalization is the removal of these borders, thereby creating one global market.

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Transformation in economic globalization is a qualitative change rather than a quantitative one

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Transformation in economic globalization is a qualitative change rather than a quantitative one

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It is considered qualitative because of the kind of economic relations and not simply on the growth of economic activities. The change is essentially on the system not simply on the volume of goods produced and distributed and on the number of economic players involved.

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Economic globalization is a process making the world economy an “organic system” 

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Economic globalization is a process making the world economy an “organic system” 

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The "organic system" pertains to the quality of systems and relations, which unfolds through extending transnational economic processes and economic relations to more and more countries and by deepening the economic interdependencies among them.

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Globalization is not incompatible with the existence of international, regional, and national economic relations

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Globalization is not incompatible with the existence of international, regional, and national economic relations

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These economic relations may still exist in a globalized economy. While these may exist among nation-states, a bigger and freer market exists outside them.

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Friedman believes that globalization is not a new phenomenon 

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Friedman believes that globalization is not a new phenomenon 

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For Gills and Thompson, globalization started from the time the Homo sapiens began to populate the world

For Frank and Gills, globalization can be traced back to the existence of the world-system (5, 000 years ago). They consider Silk Road, the land routes that connected Asia, Africa and Europe as proof of the existence of this ancient globalization

For Benczes,  the origin of modernity and globalization (16th Century) is the start of the long-distance trade

For Adam Smith, the technological and methodological developments introduced by the British Industrial Revolution overshadows all this

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For Friedman, the historical process of globalization evolved one stage to another:

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For Friedman, the historical process of globalization evolved one stage to another:

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Globalization 1.0 (from 1492-1800)

Globalization 2.0 (1800-2000)

Globalization 3.0 (2000-onwards)

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Friedman declares that the world is flat 

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Friedman declares that the world is flat 

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To Friedman, this means the barriers that separate people all over the world are removed thereby giving them equal access to the resources of the world.

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Friedman enumerates ten (10) significant events that have flattened the world:

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Friedman enumerates ten (10) significant events that have flattened the world:

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Fall of Berlin Wall

Introduction of Netscape to the public

Invention of Work Flow Software

Outsourcing

Offshoring

Open-sourcing

Insourcing

Supply-chaining

Informing

Steroids

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The Fall of the Berlin Wall as a Flattener of the World 

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The Fall of the Berlin Wall as a Flattener of the World 

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The fall of Berlin Wall marks the end of communism, since the establishment of the Berlin Wall divided Germany into two ideologically opposed nation-states: West Germany (capitalism) and East Germany (communism).

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The introduction of Netscape as a Flattener of the World

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The introduction of Netscape as a Flattener of the World

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This brought the Internet alive by giving us the browser to display images and data stored on Web sites

This also led to the massive overinvestment of billions of dollars in fiber-optic telecommunications cable

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The third flattener is the invention of the workflow software 

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The third flattener is the invention of the workflow software 

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This enabled more people in more places to design, display, manage, and collaborate on business data previously handled manually.
With this, work started to flow within and between companies and continents faster than ever

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Neoliberalism as the ideology behind Economic Globalization

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Neoliberalism as the ideology behind Economic Globalization

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Neoliberalism refers to market-oriented reform policies, which  enhance the workings of free market capitalism. It is a system of thoughts that seeks to legitimize or justify the prevailing form of economic globalization.

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What Is Neoliberalism?

Neoliberalism is a policy model that encompasses both politics and economics. It favors private enterprise and seeks to transfer the control of economic factors from the government to the private sector.

Many neoliberal policies concern the efficient functioning of free market capitalism and focus on limiting government spending, government regulation, and public ownership.

Neoliberalism is often associated with the leadership of Margaret Thatcher, the prime minister of the U.K. from 1979 to 1990 (and leader of the Conservative Party from 1975 to 1990) and Ronald Reagan, the 40th president of the U.S. from 1981 to 1989.

More recently, neoliberalism has been associated with policies of austerity and attempts to cut government spending on social programs.

Understanding Neoliberalism

Neoliberalism is a political and economic philosophy that emphasizes free trade, deregulation, globalization, and a reduction in government spending. It's related to laissez-faire economics, a school of thought that prescribes a minimal amount of government interference in the economic issues of individuals and society.

Laissez-faire economics proposes that continued economic growth will lead to technological innovation, expansion of the free market, and limited state interference.

Additionally, neoliberalism is sometimes confused with libertarianism. However, neoliberals typically advocate for more government intervention in the economy and society than libertarianism. For example, while neoliberals usually favor progressive taxation, libertarians often eschew this stance in favor of schemes like a flat tax rate for all taxpayers.

In addition, neoliberals often do not oppose measures such as bailouts of major industries, which are anathema to libertarians.

While neoliberal policies may be considered conservative and contrary to the political beliefs of many, it should be noted that various U.S. neoliberal initiatives such as free trade agreements, the deregulation of the transportation, utilities, and banking industries, and cuts in the top income tax rate and the capital gains tax all had bipartisan support.

Characteristics of Neoliberalism

Neoliberalism involves the belief that greater economic freedom leads to greater economic and social progress for individuals. It supports:

Free enterprise, competition, deregulation, and the importance of individual responsibility

Opposition to the expansion of government power, state welfare, inflation

Minimizing government control of industry and boosting private sector ownership of business and property

Free market capitalism and the efficient allocation of resources

Globalization rather than heavily regulated markets and protectionism

A reduction in government spending and lower taxes

Less government control over economic activity to enhance the efficient functioning of the economy

An increase in the impact by the private sector on the economy

A reduction in union power and greater flexibility in employment

Government intervention when it's needed to help implement, sustain, and protect free market activities

Liberalism vs. Neoliberalism

At its core, liberalism is a broad political philosophy. It holds liberty to a high standard and defines all social, economic, and political aspects of society, including the role of government.

Neoliberalism is essentially an economic ideology. The policies of neoliberalism are more narrowly focused and are primarily concerned with markets and the policies and measures that influence the economy.

Criticism of Neoliberalism

There are many criticisms of neoliberalism.

Misguided Free Market Approach to Public Services

One common criticism of neoliberalism is that advocating for a free market approach in areas such as health and education is misguided because these services are public services. Public services are not subject to the same profit motivation as other industries.

More importantly, adopting a free market approach in the areas of health and education can lead to an increase in inequality and the underfunding of resources (health and education) that are necessary for the long-term health and viability of an economy.

Monopolies

The adoption of neoliberal policies in the Western world has run concurrent with a rise in inequality in both wealth and income. While skilled workers may be in a position to command higher wages, low-skilled workers are more likely to see stagnant wages.

Policies associated with neoliberalism tend to encourage the presence of monopolies, which increase the profits of corporations at the expense of benefits to consumers.

Increased Financial Instability

Contrary to what proponents of neoliberalism typically claim, capital deregulation has not necessarily helped economic development. Rather, capital deregulation has led to an increase in financial instability including economic events that, at times, have sent shockwaves around the world.

In fact, an International Monetary Fund (IMF) report into neoliberalism reveals that an increase in capital flows has been a factor in the increased risk of adverse economic cycles.

Inequality

Neoliberal policies have been proven to increase inequality. This inequality can hinder the long-term growth prospects of an economy. On one end of the spectrum, those who earn a low income have limited spending power. At the same time, those who become richer have a higher propensity to save.

In the latter scenario, wealth doesn't trickle down in the way that proponents of neoliberalism claim that it will.

Globalization

Finally, neoliberalism's emphasis on economic efficiency has encouraged globalization, which opponents see as depriving sovereign nations of the right to self-determination.

Neoliberalism's naysayers also claim that its call to replace government-owned corporations with private ones can reduce efficiency. While privatization may increase productivity, they assert, the improvement may not be sustainable because of the world's limited geographical space.

In addition, those opposed to neoliberalism add that it is anti-democratic, can lead to exploitation and social injustice, and may criminalize poverty.

What Is Neoliberalism in Simple Terms?

What Are the Effects of Neoliberalism?

What Is an Example of Neoliberalism?

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Neoliberalism: What It Is, With Examples and Pros and Cons

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Neoliberalism is a policy model that favors the transfer of economic control from public to private sectors. Here's more about the term and its real-world applications.

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free market -  this is based on supply and demand, free from government control

free trade - a trade policy that does not restrict imports or exports

deregulation - the reduction or elimination of government power in a particular industry

privatization - occurs when a government-owned business, operation, or property becomes owned by a private, non-government party

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World Bank -  an international organization dedicated to providing financing, advice, and research to developing nations to aid their economic advancement

International Monetary Fund -  an international organization that promotes global economic growth and financial stability, encourages international trade, and reduces poverty.

World Trade Organization -  an international institution that oversees the global trade rules among nations.

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According to Joseph Stiglitz, economic globalization has failed to promote the greatest happiness of the greatest number of people due to the increasing inequality.

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Technological advancements

Information dissemination

Cheaper goods

Acceleration of development process

Gaining mutual trust

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Exploitation of Developing Nations

Tax Evasion

Climate Change and Environmental Impacts

Rising socioeconomic insecurity

Encourage spread disease

Labor exploitation may increase

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In your own words, describe the concept of neoliberalism. 

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In your own words, describe the concept of neoliberalism. 

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As an ideology, neoliberalism promotes the freedom of individuals, hence the free market, free trade, deregulation, and privatization. In contrast to communism, it emphasizes the value of economic freedom without the intervention of the state or government.

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Explain how neoliberalism justifies the prevailing form of economic globalization.

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Explain how neoliberalism justifies the prevailing form of economic globalization.

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Economic globalization would not be possible without the policies that promotes the widespread international movement of goods, capital, services, technology and information. Neoliberalism aligns with this goal as it eliminates barriers like government intervention, while encouraging free trade and free market. These policies help increase global trade that will lead to more competition, which helps boost economies.

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Explain why economic globalization according to Joseph Stiglitz is a failure. 

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Explain why economic globalization according to Joseph Stiglitz is a failure. 

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According to Stiglitz, Economic Globalization has failed to make the greatest amount of people happy. Economic globalization is predicated on the expectation that a worldwide free market economy will result in remarkable global affluence. Globalists claim that economic globalization will gradually benefit both rich and developing countries. It is true that the earth's flattening has benefited countries and peoples all over the world in various ways, but poverty and inequality continues to rise.