Globalization and Neo-liberalism

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 This  essay  defines  the  two  terms, globalization  and  neoliberalism. The  significance  and  impact  of  these  trends  are  discussed in  the  later  part.


 Globalization  is  a  term  coined  for  growing  cooperation  between  all  nations  of the  globe. It  is  aimed  at  cooperation  in  all  spheres, like  economic, social, technological, cultural, political  and  ecological  spheres. It  is  best  understood  as  a unitary  process, such  as  enhanced  economic  interdependence, increased  cultural influence, rapid  advances  of  information  technology  and  novel  governance  of geopolitical  changes. These  forces  are  binding  people  and  biosphere  more  tightly into  one  global  system.

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 In  the  economic  context, globalization  is  the  convergence  of prices, products, wages, rates  of  interest, and  profits  according  the  norms  of  the  developed  countries. It  depends  on  the  role  of  human  migration, international  trade, movement  of  capital and  integration  of  financial  capital. The  International  Monetary  Fund  monitors  the growing  economic  interdependence  of  countries, free  international  capital  flows  and diffusion  of  technology. Theodore  Levitt  is  credited  with  the  first  use  of globalization  in  the  economic  context.

Empirical  globalization  used  to  exist  during  the  Mongol  Empire, when  there  was  greater  integration  along  the  silk  route, and  later  in  the  16th  and  the  17th centuries  when  the  Portugese  and  the  Spanish  Empires  reached  to  all  corners  of the  world.

However, it  became  a  business  phenomena  with  the  establishment  of  the  first multinational  in  the  Netherlands. The  Dutch  East  India  Company  was  established as  a  private  company. It  was  the  first  company  to  issue  shares, an  important  tool for  globalization.

Liberalization  in  the  19th  Century  is  called “ the  first  era  of  globalization”  a period  characterized  by  rapid  growth  in  trade  and  investment  between  the European  powers, their  colonies  and  the  United  States. This  period  came  to  an  end at  the  beginning  of  the  first  world  war.

Post  world  war  II  globalization  was  driven  by  advances  in  technology  which have  reduced  the  costs  of  trade. Trade  negotiation  rounds  under  the  GATT  led  to removal  of  restrictions  on  free  trade.

There  are  many  issues, apart  from  the  economic, that  require  international  cooperation. These  cannot  be  solved  by  any  country  on  its  own. Issues  like  cross boundary  air  and  water  pollution, degradation  of  natural  environment, regulation  of  outer  space, global  warming  etc. require  close  links  between  many  nations. New global  institutions  are  a  necessity  to  solve  these  types  of  problems. Since  the  end of  WW  II  there  has  been  an  explosion   in  reach  and  power  of  multinational corporations  and  global  civil  society.

The  major  aspects  of  neoliberalism  as  summarized  from “ A  definition  of Activities”, by  Elizabeth  Martinez  and  Arnoldo  Garcia, from  the  corporate  watch,  include:

The  rule  of  market  freedom  for  capital, goods, and  services  and  deunionizing  of  labor  forces  and  removal  of  all  regulations.

  • Reducing  public  expenditure  for  social  services.
  • Deregulation  to  allow  market  forces  to  self  regulate.
  • Privatization  of  public  enterprises

Changing  perceptions  of  public  enterprise  and  community  to  individualis and  individual  responsibility. The  guiding  principles  for  neoliberalism,  as  perceived  by  Richard  Robbins  i his  book, “ Global  problems  and  culture  of  capitalism”, (Allyn & Bacon 1999, p.100) are Sustained economic growth is the way to human progres Free  markets  without  government  interference  will  be  most  efficien Economic globalization would be beneficial to everyone.

Privatization removes inefficiencies of public sector. Government should mainly function to provide infrastructur  The  roots  of  neoliberalism  lie  in  a  book  titled, “ The  wealth  of   Nations”, b Adam  Smith  in  1776. Today, Adam  Smith  is  regarded  as  the  father  of  modern  free market  capitalism. In  this  book  he  had  suggested  that  for  maximum  efficiency  all government  intervention  in  economic  issues  must  be  removed.

Trade  between  countries  till  the  great  depression  of  1930s  was  largely  supported  by  geopolitical  factors, mainly  colonization. The  resources  of  the colonized  countries  were  brutally  exploited  by  the  colonizers  to  maximize  their profits. No  element  of  free  trade  as  perceived  by  Adam  Smith  was  present  in these  practices. The  climax  of  savagery  was  trade  of  African  humans  as  a commodity !!

In  the  years  that  followed, elites  and  corporations  saw  their  profits  diminish, under  the  equalizing  effect. Post  world  war  II, economist  Freidrich  von  Hayek, at the  University  of  Chicago, propagated  the  theory  of  neoliberalism, which  was nothing  but  revival  of  economic  liberalism  stated  by  Adam  Smith.

The  Thatcher  and  Reagan  era, in  particular, saw  neoliberalism  pushed  to  every part  of  the  globe, almost  demonizing  anything  that  was  public, and  privatizing anything  that  was  owned  by  the  public, using  military  interventions  if  needed. The poorer  countries  were  forced  to  open  their  economies  so  that  big  businesses  from the  rich  countries  could  own  or  access  resources  cheaply. The  poor  nations  have always  been  the  target. ( Shah Anup )

Globalization  and  neoliberalism

The  world  affairs  have  been, are  and  will  be  in  future, dominated  by  the  big five  to  seven  brothers  who  term  themselves  as ‘ developed  countries’. All  the  other ‘developing’ , and ‘poor’, countries  are  like  puppets  who  must  dance  according  to the  tunes  of  these  big  brothers. If  they  do  not  they  will  be  squeezed  by  military actions  and  economic  sanctions. History  proves  this.

Globalization  and  neoliberalism  are  new  words  coined  to  replace ‘colonization’ and ‘slavery’. It  is  the  same  body, wearing  a  new  suit, that  is  adorned  with decorative  buttons  like, “ international  cooperation”, and “mutual  progress”. It  is  a hoax, created  once  again  by  the  developed  nations, to  exploit  the  poor  and  the developing  countries.


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