Globalization and Inequality

© Dr. S A Hamed Hosseini, UoN, 2010                                              SOCA6120                                          19-April-2010

Cite this piece: Hosseini, S. A. (2010), Globalization and Inequality [online]. Available: https://globalalternatives.wordpress.com/2010/04/01/globalization-and-nation-state/, [Accessed on …/…/20…].

Introduction

So far, we have discussed three different aspects of global change (or what has become known as globalization): the economic, the political and cultural change at the global level. Many still may prefer to use the word globalization to refer to economic and technological changes that have facilitated more integration and more interconnection. However, the evidence that we have discussed so far explicitly shows that reality of global transitions is too complex to be theorized under the title of world integration. Many still may believe that globalization means more openness to global market economy and more use of new communication and information technologies, more corporation rule. However, studying different case studies and societies implies that different societies have been involved in the global change in different ways and have experienced different outcomes regarding their position in the emerging power structures.

For many, globalization still may mean the only viable option before societies which can improve the economic and therefore social status of societies if fully endorsed by the members of society, for example by adopting neoliberal policies and joining the world free market. Reality is however far more complex. For a great number of societies that have adopted these policies to a significant extent and for a few decades, these policies have caused greater levels of inequality, unrest and crises despite some temporary improvements in terms of GDP or basic health issues such as life expectancy at birth. Many Latin American societies, for instance, have responded to the neoliberal policies by shifting towards center-left politics and social democracy (Brazil, Chile, and Argentina), some others have responded by revitalizing socialist-populist agenda like in the case of Venezuela, Paraguay (with a new president known as the bishop of the poor) and Bolivia (Eva Morales, the first endogenous president of the country).

A different range of experiencing the neoliberal agenda related to those societies which have not been able to ‘fully’ embrace the required reforms due to the inapplicability of the policies in their social and political context. These societies have extremely exploited their human and natural resources, became paralyzed under a heavy foreign debt, or lacked the necessary infrastructures or strong political governance (Many cases can be found in Africa).

In contrast, we may refer to some other few cases that are considered as the successful examples of economic globalization. Among them, South East Asian societies and the most recent and prominent one, i.e. China. A closer look at these cases like China that have shown a long term growth will reveal that these cases have started their growth at least one decade earlier before adopting neoliberal policies, by heavily investing on their education, infrastructures while pursuing a rather equal distribution of wealth/land. Even later after shifting toward economic liberalization, they have implemented these neoliberal policies very gradually and cautiously with significant government-led financial regulations to not only attract investments but also to avoid them from leaving the country in the difficult times. In terms of outcome, although the economic growth rate has been high and some sections of their population are lifted out of absolute poverty, there are so many ifs and buts around the consequences of economic changes for different groups of society.

These policies have increased inequality though have improved the average basic living standard and created a new middle class around the newly growing metropolitan areas. During the pre-liberalization period, the majority of people in these societies were equally depressed by their ruling (communist or nationalist) elite. However, after shifting towards market capitalism, the elite have distributed the new opportunities (mostly through uneven privatization processes), giving privilege to party loyalists, friends and relatives. Therefore, a new urban middle class has emerged in these countries and the rest of society is pushed back to a more unsecured unsustainable life.

Global Changes and their impacts on inequality and poverty

The question here is if globalization has increased global and national inequalities. Answering this question requires extensive clarifications, regarding our concerns about the use of overarching terms like ‘globalization’ and ‘inequality’. Different globalization processes (political, economic, social and cultural) have affected societies with respect to their levels of inequality and poverty. If by economic globalization, we mean the liberalization of national economies and their integration into the world free trade system, then one may differentiate such an enormous economic factor from the transnationalization of social relations (people’s involvement in cross-national communications and friendship) or from the globalization of cultural values and ideas (such as fundamentalism or cosmopolitanism). These processes, while interacting with one another, influence inequality/poverty in various ways depending on the context. It will be beyond the scope of this week discussion to cover all these forms of global change and their impacts on inequality. Therefore, we our focus can be narrowed down to the impacts of economic global change on income inequality both within and between countries. However, we still need to acknowledge that our answer to such a narrowed question can depend on so many issues.

Similar to the previous weeks where we were raising the question of “globalization of what?” in order to add clarifications to our arguments, we may also need to raise the question of “inequality of/in what?” (income, health, education, welfare, rights, etc). Our findings about the impact of global change on inequality may also depend on some other considerations such as:

  • Inequality between what? (continents, regions, nations, communities, households, individuals, sexes)

  • Inequality in what time frame? (a decade, a century, a particular period in the history of a country)

  • Inequality based on what types of data and what methods of calculations or analytical/theoretical approaches?

There are also a couple of points that need to be mentioned:

  • While quantitative studies can show us the scales and extents of inequality and poverty in terms of the number of people and severity of gaps, they disguise many practical, emotional, and humane aspects of reality. No matter how accurate are the data, the ‘quality of life’ is a quality issue rather than a quantity issue (that is why it is called ‘quality of life’ rather than ‘quantity of life’!). Have we ever spent one day with a poor slum dweller family in India, with an Afghani household in a refugee camp in Pakistan, with an Iranian asylum seeker in a detention centre or an Iraqi family desperate for medication for their child during the 1990s US-led UN sanctions of Iraq that caused hundreds of thousands of Iraqi children simply perish?

  • Behind inequality is the big question of power – usually exercised through policies and coercive actions – that determines who can have how much. Many studies, especially those implemented by powerful capitalist institutions and think tanks, do not address the issue of (political and economic) power relations. Many of these studies are blind to the uneven and unfair nature of the capitalist economic system that is supposed to be the most reliable system. Similarly, they are blind to the historical roots of inequality and poverty in the low-income societies and assume that these societies can improve their situation through a more efficient integration with the world capitalist economic system. Therefore, their analyses remain superficial. For instance, considering overpopulation and lack of productivity in these countries as the factors behind their poverty simply shows that these studies are not able to acknowledge the inter-connectivity and historicity of these factors. In fact, overpopulation in most of the world is caused by poverty, inequality and especially the lack of education. Low productivity in these countries is rooted in their history of relationship with powerful states since the colonization era. An economic policy system that encourages more and more consumption in order to stimulate more and more production and thereby greater levels of growth is a system that ends up in dis-empowering and dis-harmonizing relationship between those who can afford the consumption of luxurious goods and those who cannot afford their basic needs. As an example consider the following fact:

In a report published by the Australian Water Association, in Europe, 11 billion dollars are spent each year on ice cream and 105 billion dollars on alcoholic drinks. In the US and Europe 17 billion dollars are spent on pet food; these figures together amount to a value ten times bigger than the fund needed to provide drinkable water, sanitation and hygiene for the African poor.  [this figures may not be accurate or up to date as the period of measurement is not mentioned]

The data on international inequality published by international institutes must always be treated with considerable caution. On 27th of August 2008, the World Bank published a report in which the previous estimations of the world poverty were revised.  In the report, the World Bank warns that the world poverty is much greater than previously thought. The Bank revised its previous estimates on the basis of new data and surveys and claimed that 1.4 billion people live in poverty, based on a new poverty line of $1.25 per day. This is substantially more than its earlier estimate of 985 million people living in poverty in 2004. The Bank also revised upwards the number of the people living in poverty in 1981, from 1.5 billion to 1.9 billion. The new estimates imply that “poverty is both more persistent, and has fallen less sharply, than previously thought” (Schifferes 2008).

In terms of global inequality, there is a general agreement among the researchers about the horrendous size of global inequality. However, the literature about the recent direction of change is divided; disputes are to some extent due to the differences in methods and to some extent are ideological. Data are not free from flaws. UNDP published a report in 2007 which presented an estimation of world wealth inequality by adopting a new notion of inequality. This new concept is argued to represent ‘global’ inequality by comparing the households’ wealth across regardless of their nationality. Therefore, unlike the earlier measurements of world inequality, which were based on the nation-state as the unit of analysis, the new notion considers households as its unit. The advantage of using this new notion is in its ability to include inequality within the nation states which used to be concealed behind the national averages (consult the following two figures):

The horrendous size of global inequality; 2 percent of the richest households in the world own 50 percent of the world’s household wealth, while 50 percent of the poorest households own less than one percent of the wealth.

Source: UNDP (2007) ‘Making Globalization Work for All: United Nations Development Program Annual Report’, UNDP.

Source: Held, D. and Kaya, A. (eds.) (2007) Global Inequality: Patterns and Explanations. Malden; Cambridge: Polity Press.

Neoliberal globalist argue that growth caused by globalization (integration into the world free market system) will improve within-country equality. However, the World bank development indicators reported in 2007 clearly shows that growth does not necessarily result in less domestic inequality. In 1996 for the first time, the UN university developed a standardized data base for comparing countries in terms of their internal inequalities. According to the recent studies based on this database, most of the countries have shown rather constant levels of internal inequality over the last four decades, except the Eastern European societies with a rising inequality but still less than the developed societies, while China has the highest rate of increase in inequality (see the following figure)

References

Schifferes, S. (2008) World poverty ‘more widespread’ – BBC Economic Report, BBC News. (consulted 27 August 2008)

Held, D. and Kaya, A. (eds.) (2007) Global Inequality: Patterns and Explanations. Malden; Cambridge: Polity Press.

UNDP (2007) ‘Making Globalization Work for All: United Nations Development Program Annual Report’, UNDP.

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One Response to “Globalization and Inequality”

  1. Zoopeelex Says:

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    Christian, iwspo.net


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