Globalization Drives Inequality: Liberalist and Structuralist Perspectives

Background

Globalisation has always been a fascinating subject because many people associate with it progress, growth, intellectual expansion, and wealth. Despite such associations, the real picture of globalisation is far from being positive. Experts at global policy forums are warning about the current and future effects of globalisation and say that there is a tremendous challenge of solving a problem that has reached a great magnitude. In order to give an adequate and informed opinion on whether globalisation positively or negatively influenced inequality, it is necessary to review different opinions and provide evidence given by researchers. It will be argued that instead of decreasing global inequality through providing various resources of profit and wealth, globalisation increased it. The discussion will be guided by the reference to liberalist and structuralist paradigms as modern theories of national relations that can shed light on ethical, political, and economic relations between global communities.

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Globalisation is defined as a process associated with the integration of trade among countries, the development of information technologies, expanding investments, and improving cultures. The process has been given a start through the opening up of economies both domestically and internationally to encourage the progress of developing countries and to raise the standards of life for people living in more impoverished regions. However, despite the fact that the intentions behind globalisation were relatively positive, the free market that operates on an international level have predominantly influenced large corporations in the Western society while negatively affecting smaller businesses and people living in poverty. Adverse effects of globalisation include the lack of regulations to guide the use of labor, the unequal distribution of resources between countries, fluctuations in prices, the spread of the fast food industry, and the prevalence of the Western culture over others.

Globalisation and Inequality

The integration of global trade to facilitate the development of economies has reached unprecedented levels following the World War I. The new way in which the global society and economy is developing has far-reaching effects not only for the economic and political stability of wealthy regions but also for countries that have not reached high levels yet. There has been an active debate on whether the way in which globalisation is distributed is fair and whether encourages the equal development of societies. On the one hand of the argument, there are optimists who think that inequality is only a primary stage of industrial development and thus it will be eliminated when countries transition to complete industrialisation (International Monetary Fund 2007). There is also a thought that the benefits of globalisation are equal for everyone, which means that those who have a variety of resources to concentrate their wealth will become wealthier while poor societies will get benefits from globalisation by improving their living conditions and getting new opportunities for work. On the other hand, theorists have argued that globalisation is only increasing inequality, which is now seen as existing in more than one type. For instance, Eric Maskin from Harvard University theorised that inequality in the modern globalised society had two varieties, one of which is ‘less worse’ than the other (Berger 2014). Such a ‘less-worse’ variety characterises inequality that can be tolerated because it occurred as a side effect of the economic growth of a country. In this context, wages of workers usually increase while other segments stay on the same level, leading to the increasing gap between the two. With regards to the ‘worse’ scenario that explains inequality, the wages of the workforce segment (usually low-wage and low-skilled employees) decline because of the dropping demand for their work; however, wages of high-skilled employees increase, which leads to inequality. Importantly, researchers are worried about the ‘worse’ version of inequality. The issue to consider is the fact that the unequal distribution of skills equals wage inequality, which means that there is a need in raising the level of skills within the workforce to ensure that employees get paid fairly.

Liberalism and Structuralism in Relation to Globalisation

Liberalism implies a response to the realist issue of anarchy and points to a need for achieving a balance and harmony of power. Key liberalist theorists included such figures as Woodrow Wilson, Joseph Nye, Leonard Woolf, and Michael Doyle. Liberalists are usually optimistic in their outlook on the state of global affairs and encourage cooperation between parties to achieve mutual gains. They base their ideas on the assumption that all countries involved in global cooperation are rational and will act in the interest of each other, which does not happen often. With regards to globalisation and its relation to liberalism, the former is considered an extension of the latter (Shelley 2018). It is essential to mention that despite the extensive studies of liberalism and globalisation, there is a lack of research literature that provides insight about how liberalism can explain the growing issue of inequality caused by the expansion of global trade. In order to understand how liberalist theories relate to globalisation, it is important to note that the market-liberal tradition that existed in the nineteenth century was extremely appealing to post-Keynesian policymakers that wanted to facilitate global economic growth. The subsequent return to ideas of liberalism in the 1970’s was characterised by a more holistic approach to modern economic globalisation as well as a possible failure of countries to ensure a stable apparatus of power that will provide citizens with equal opportunities for growth.

Structuralism has been developed on the basis of Marxist understanding of political economy and has entered the discipline relatively late. Key structuralism theorists include Simon Blackburn, Claude Levi-Strauss, Roman Jakobson, Jacques Lacan, Roland Barthes, Louis Althusser, and others. In contrast to liberalism that encourages collaboration for motivating international economies and politics, structuralism is rather a power-based approach that studies the way in which wealth is distributed. Within the structuralist perspective, rich capitalist countries are seen as the ones continuously trying to gain as much power and wealth as possible to the detriment of poorer states. These states, on the other hand, are aiming to gain some profits from commerce in order to improve the quality of life of their citizens as well as reduce gaps in the distribution of wealth. Therefore, the structuralist view can be used for supporting the argument that globalisation increases inequality worldwide.

Economic structuralism is essential to consider in the discussion about the impact of globalisation and the unequal distribution of resources and wealth among states because of the deterministic nature of the paradigm’s assumption. This means that political behaviors that countries exhibit in the context of globalisation are driven by their economic motivations. Within the economic structuralist perspective, the modern world is not divided by geographical boundaries but by classes that have different economic interests. The world-systems theory applies to this case because it explains processes involved in the capitalist world economy as a total social system (Martinez-Vela 2001). First articulated by Immanuel Wallerstein in 1974 in The rise and future demise of the world capitalist system: Concepts for comparative analysis, the world-systems theory is valuable to the discussion because it explains why labor is divided in a culture-based way. The division of labor (both equal and unequal) is linked to relationships and forces that drive the world economy in general. Core, semi-periphery, and periphery are interdependent regions, in which labor is distributed, which means that they reflect the nature of international relations (Martinez-Vela 2001). Researchers have also stated that the complex political processes that transform power resources into power are guided by interdependence (Keohane & Nye 1941). It is also important to note that states’ goals vary depending on the issues that they are planning to resolve, which means that each bureaucracy will pursue its own goals without caring to act in accordance with consistent patterns of policy.

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Despite the fact that there are differences in the way structuralism and liberalism explain the nature of globalisation and its effect on inequality, both paradigms strive to “capture phenomena in their focus in a holistic or systemic way” (Morawski 2010, p. 150). While liberalism considers globalisation as the process that is the extension of modernisation by means of the market, structuralism views the process as the universal and that, which can eliminate political boundaries to reaching economic objectives (Ardalan 2009).

Globalisation and Inequality from Structuralist and Liberalist Perspectives

As some researchers have claimed that inequality in a globalised society significant declined in the last quarter of the twentieth century, the issue of unequal wages and access to resources has been subjected to heated debate for the last decade (Wade 2002). In addition, approaches to exploring inequality with regards to globalisation depend on how researchers measure inequality. For instance, there can be alternative income measurements (e.g., converted GNP per capita to US currency compared to GNP that was adjusted in accordance to a country’s purchasing power), alternative distribution measures, different country samples, and other measurements of poverty. Nevertheless, modern media outlets continue reporting on how globalisation increased inequality. For instance, Hickel (2016) from The Guardian reported that the richest 1% in the world have more wealth than the “rest of the world’s population combined” (para. 1). Soergel (2017) from US News also focused on growing income inequality, with executives and other higher standing workers being paid exponentially more compared to employees who have labor-intensive jobs.

If to apply structuralist and liberalist theories to the discussion about globalisation and inequality, several hypotheses can be developed. From the structuralist standpoint, hunger and poverty, which are components of inequality, are possible to trace back to the colonial policies that powerful nations enforced in the past (Balaam & Veseth 2014). Theorists that have explored the dependency paradigm have described the ideas of structuralism as a classical economic approach toward guiding relationships between powerful and powerless states. Since many of the developing countries were once rich from land resources, they have ascribed to the structuralist adjustment policies that emphasized the role of neoliberalism, which consequently led to the smaller and less developed states borrowing from foreign banks. As the majority of countries wanted to finance their debt to international banks through revenues from exports, developing countries have drastically changed their economic direction in favor of industrialisation, thus significantly reducing the investment in agriculture. This resulted in such countries depending on imported food, which drove local markets out of business. The structuralist perspective implies that there should be a greater focus placed on the development of local food production to reduce poverty. However, foreign aid from wealthier and more powerful countries can make smaller states even more dependent and therefore less able to withstand inequality. As powerful and economically sustainable countries try to pursue their political and economic interests on the global scale, the unequal distribution of wealth is inevitable. An important point to consider in this scenario is the existence of imperialism manifested through hidden agendas that global financial institutions follow (Balaam & Veseth 2014). With the continuing of neocolonialism on a global scale, the unequal distribution of power and resources make it necessary for poorer countries to get involved in a never-ending cycle of debt, which even furthers inequality.

When it comes to the liberalist perspective, those who ascribe to this view think that inequality is a structural divide between open economies that grow fast and states that choose following other models of economic development. Researchers have argued that the expansion of manufacturing capacities in developing states can become a force that will inevitably eliminate the wealth gap between First and Third-world countries (Wade 2002). Liberalists are eager to prove that economic growth will eliminate poverty and make the access to resources and wealth more equal. An important issue to mention with regards to this opinion is the inconsistency in the analysis; for instance, poverty numbers and wage inequality statistics are usually collected from nationwide surveys while the economic measures of countries’ growth come from sources such as national income accounts. This means that the liberalist perspective does not hold up when there are disparities in the way gaps in income are measured. It is essential to mention that the liberalist perspective on globalisation and inequality diverts the attention from the adverse influence of global markets. Simply stating that if countries “adopted good policies and worked hard” they would rise “in the hierarchy of inequality” is ineffective and lacks a clear vision on how inequality should be treated on a global scale (Wade 2002, p. 20). Liberalism does not explain the fact that a only a few countries have increased their per capita income, which means that only a small percentage of states that worked hard could improve their inequality statistics.

On the other hand, liberalism (especially social liberalism) provides a number of solutions on how inequality and poverty could be eliminated. While the structuralist approach suggests focusing on domestic food production and the improvement of skills for the workforce, social liberalism recommended the encouragement of state democratic action with regards to the areas of welfare such as pensions, insurance, healthcare, unemployment benefits, and so on. For instance, Ronald Dworkin, a liberal social philosopher, advocated for affirmative action programmes to cater to the least advantaged groups. However, such efforts are potentially damaging to many economies because they make societies depend on local and foreign governments instead of facilitating training and improving their skills to get high-paying positions.

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Conclusion

To conclude, it should be mentioned that different approaches to globalisation and inequality provided unique perspectives on how global political players treat their economic issues. For instance, the structuralist perspective provided a bottom-up approach that can be viewed as a foundation for future analysis of the institutionalisation of inequality within the globalisation context. Importantly, the structuralist approach shed light on such ideas as dependency theory, modern-world systems, and neocolonialism as characteristics of the current struggle of countries to overcome the unequal distribution of wealth. The theory of dependency is worth noting in the context of inequality because structuralists argued that when smaller and low-income countries depend on other states for imported goods and welfare support, their fail to address their internal issues and continue to exacerbate the issue. On the other hand, liberalists have been much more open to foreign support and suggested that the economic expansion of all countries will bring equal benefits to all countries, which may sound promising in theory but is unfortunately not matching the current situation on the international arena.

It is an undeniable fact that instead of facilitating economic improvement across the board, globalisation has only benefited powerful bureaucratic nations that concentrate wealth within their borders. Such nations get wealthier at the expense of developing nations that lack resources to invest not only in their industrial production but also in domestic agriculture that creates jobs and produces food that is lower in price compared to imported goods. The structuralist theory holds more ground with regards to proposing solutions for overcoming inequality because it focuses on the actual historical events such as colonisation and its influence on the society today.

Reference List

Ardalan, K 2009, ‘Globalisation and culture: four paradigmatic views’, International Journal of Social Economics, vol. 36, no. 5, pp. 513-534.

Balaam, D & Veseth, M 2014, Introduction to international political economy, Prentice Hall, Upper Saddle River, NJ.

Berger, N 2014, Theorist Eric Maskin: globalisation is increasing inequality. Web.

Hickel, J 2016, ‘Global inequality may be much worse than we think’, The Guardian. Web.

International Monetary Fund 2007, World economic outlook: globalisation and inequality, International Monetary Fund, Washington, DC.

Keohane, R & Nye, J 1941, Power and interdependence, Longman, New York, NY.

Martinez-Vela, C 2001, World systems theory. Web.

Morawski, W 2010, Globalisation in a structuralist perspective. Web.

Shelley, T 2018, Globalisation and liberalism: an essay on Montesquieu, Tocqueville, and Manent, Forthcoming Books, New York, NY.

Soergel, A 2017, ‘Study: globalisation has boosted income inequality’, US News. Web.

Wade, R 2002, Globalisation, poverty and income distribution: does the liberal argument hold?. Web.

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