Globalization and Neoliberalism, Research Paper Example

Introduction

Several debates about the impact on globalization and neoliberalism are currently held by international organizations, political scientists, and researchers. While many scholars focus on exploring the economic or political impact of both international trends, the below essay would like to examine the relationship between them.

The main thesis that the author is looking to focus on is that globalization and neoliberalism are two sides of the same coin. Globalization brings societies together culturally. Neoliberalism or neoliberal economics works on the resource acquisition portion. Globalization supports Neoliberalism and vice vversa: where it doesn’t practice its adage of fair competition and the likes… the tool used by neoliberalism is the Washington consensus which has been adopted as a guideline for NGO-s, like the World Bank, WTO, IMF.

Arguments Around Individualism and Lack of Solidarity

Some authors argue that globalization and neoliberalism make the world less equal, and the distribution of goods unfair. Barnett (2011) asks the question: what is wrong with Neoliberalism. Comparing the views of the proponents and opponents of the political and ideological approach, the author finds that Neoliberalism promotes individualism and a shift away from public concern. However, looking at the activities related to Neoliberalism and the NGO activities that are built on the same ideology, this can hardly be true. It is important to review the binaries that Barnett (2011, p. 3) brings up to contrast neoliberalism with the previous international political order: “public versus private; consumer versus citizen; liberty versus equality; individual utility versus collective solidarity; self-interested egoism versus other-regarding altruism”.  Based on the above comparison, it is evident that most opponents of neoliberalism believe that this approach destroys public life, shared responsibility, by promoting individualism and reducing solidarity. Is that true, does neoliberalism move towards egoism, and is there less focus on promoting equality? Several authors have researched the above question, in particular focus on globalization’s economic and political consequences. These will be reviewed in detail below.

The Negative Impacts of Neoliberal Globalization

According to Friends on Earth International (2003), globalization in a Neoliberal form contributes towards increasing levels of inequality within and between countries. Resources and power are now concentrated in the hands of the few (people and countries), and the tools of economic and political exclusions result in countries’  economic instability. While the article focuses on the economic impact of neoliberal globalization, it is a useful resource to explore arguments and confirm the thesis statement that neoliberalism and globalization have the same aim: changing the economic and political landscape to promote equality and  fairness. Barney (20111) r claims that “neoliberalism has not been particularly successful as a means of restoring conditions for stable economic growth and capital accumulation”. Indeed, dispossession is one of the methods that both political neoliberalism and globalization utilize to make the social, economic, and political order more universal. The question is whether or not making wage labor, production, social and political order universal serves the interest of people. One of the main characteristics of neoliberalism, according to Harvey (2006) is that it can be implemented by both democratic and authoritarian countries. Based on that statement, it is clear that neoliberalism is not intending to change the political and social order, and has no negative impact on equality.

A more solid argument against Neoliberalism was created by Stiglitz  (2002). The author reviewed the rights and obligations of  countries and individuals within the independent (and global) world. In a more recent article, the author (Stiglitz, 2013)  claimed that inequality is a choice, and not a consequence of neoliberalism or globalization. However, he claims that asymmetric globalization resulted in a race to the bottom. Contrasting the social and economic structure of developing countries with America and Western Europe, the author highlights an important issue. While globalization and Liberalization proponents claim that promoting the same principles as those in advanced countries would result in lower equality, this is not the case. According to Stiglitz (2013), “In America, nearly one in four children lives in poverty; in Spain and Greece, about one in six; in Australia, Britain and Canada, more than one in 10”. Therefore, the simple answer to the question: “what is wrong with neoliberal globalization” is that it assumes the absolute  superiority of its values and ideas, instead of looking at them critically.

Smith  (2012) argued that poor economic conditions are responsible for violence, while they can also be a result of violence. While some authors argue that neoliberalism has managed to reduce absolute inequality, however, relative inequality has increased. As  Smith (2012) confirms, many authors blame the rising inequality on the capitalist nature of neoliberalism. This is when globalization’s  impact on developing countries becomes relevant. As Smith (2003) confirms, through :suppressing the rights of the commons, commodifying labor power, suppressing all non-capitalist forms of production and consumption, appropriating assets, monetizing exchange and taxation, and initiating credit systems”, globalization promotes countries’ unequal development, and reduces some countries’ national competitiveness and opportunities. Social issues originating from rising inequality result in interpersonal violence. Reviewing the example of Brazil, the author found that while in the 1990-s the country embraced neoliberal  values and introduced reforms joining in with the global community, entering trade  agreements, income inequality did not reduce. Even though markets and investments were liberalized, economic disparities did not change (Martell, 2010). Based on the above country-specific case study of neoliberal globalization, it is evident that the reforms did not bring forward visible benefits for the population in general. This, however, can be due to the country’s inability to successfully implement a new market approach, or the shortcomings of neoliberalism.

Social Order in Developing Countries after Neoliberal Globalization

De Soto (2000) claims that property law does not work outside of the Western civilization, therefore it should not be enforced through globalization on countries that do not share the same political and economic traditions. Social and political orders are not universally relevant and suitable for all countries, as the author claims. Economic and political reforms that were introduced in Eastern and Central Europe, after the fall of the Soviet Union were not entirely successful, according to De Soto. The Washington consensus promoting neoliberal orders introduced reforms in developing countries that increased social conflict. Countries failed to modernize their  economies and property systems, and the reforms had little or no benefits. Based on the claims presented by De Soto’s book, capitalism and neoliberalism is not the most viable economic system, and the West should not make other countries introduce  reforms that promote this social, economic, and political order. The above argument confirms that globalization is a tool that promotes the universalization of neoliberal  values and order, and tries to promote equality. However, the truth is that not all countries are able to adapt to the new order in the same way, and some undemocratic cultures take longer to adapt capitalism, neoliberal approaches and social order. These countries will have limited international competitiveness, and  equality will occur. Still, stating that neoliberalism or globalization are the main sources of global inequality would not be a well founded argument.

Fougner (2006) examined the same question as De Soto: the impact of  globalization on countries’ competitiveness. Describing the ‘competitiveness problem’, the author states that the pressures for  international homoegenization aiming for increasing countries’  competitiveness achieve the opposite results. Further, Fougner (2006, p. 167) argues that “state actors and agencies were increasingly intertwined with ‘transgovernmental networks’ – and that the neoliberal state had become ‘the orthodox model of the competition state today”. While the above description of the impact of  neoliberalization might be well-founded, it is important to note that any globalization effort would result in the loss of national individualism, and characteristics. Still, the article provides the current research with a confirmation that globalization is a tool that is focuses on standardization of social, economic, and political systems, and as the origins of globalization lie in neoliberalism, this approach will evidently become more relevant and prevalent around the world.

Fasenfest (2010) describes the above trend in globalization as “an attempt to alter the legislative landscape in countries around the globe in order to accommodate globalization, to attack social welfare”. This approach –  recently seen within the European Union – is based on the current mainstream neoliberal approach. However, it is also important to mention that countries willingly entered international communities, in the hope that they would benefit more than they would give up, and they are not tied to their membership. Based on the principles of neoliberalism, all countries have a choice to embrace or refuse globalization.

Otero (2011) states that the internationalization of production led to the emergence of globalization. Therefore, neoliberalism is responsible for globalization’s effects, and vice versa.

The Potential Benefits of Neoliberal Globalization

Sachs (1998, p. 10) stated in one of his famous speeches that “we have made some remarkable progress in recent years in creating an international legal framework for commercial transactions, despite the absence of an overarching, or hegemonic, power”. The importance of creating legal and political networks to support countries in their economic and social development programs could be the main benefit of neoliberal globalization. The most important aspect of the above quoted statement is that in neoliberalism, there is no absolute power that forces the new rules onto other countries. While some authors whose works have been reviewed above argued that there is indeed a tendency of influencing internal affairs of countries through aids and alliances, trade agreements, the choice is indeed left to individual countries. They have the option to choose between the West’s offerings and support or to rely on their own resources and deal with their issues individually. The response to globalization among developing countries was not simply based on the amount of aid received, but political and economic analysis, as well as the governments’ efforts to increase their country’s international competitiveness.

Scholte (2005) summarizes the benefits of neoliberal globalization as productivity improvement, greater consumer choice, and material welfare.

Fasenfest (2010) describes the second half of the 20^th century as a constant struggle between the elites of nations and international capital. The debates were held mainly around the autonomy of countries, and the impact of trade agreements on individual economies. Still, according to the author, international and – in particular – regional trade agreements have benefited both governments and citizens of developing countries. Without globalization, national policies would not have been adjusted in a way that they encouraged sustainable development. The author also argues that globalization restricted to breaking down international trade barriers will not necessarily promote equality and the free flow of capital. Without countries embracing capitalism and neoliberal values, it is impossible for the global economy to prosper.

The Negative Impact of Neoliberal Globalization on Inequality – Review of Arguments

Rapley (2004) argues that the majority of mainstream political scientists claim that political instability and inequality go together. The author examines how neoliberal globalization impacted national and global income distribution, and consequently the political stability of regions/countries.

Another critic of globalization and neoliberalism, Otero  (2011) reviewed the case of Mexico, claiming that globalization and neoliberal international approaches led to the country’s “loss of food and labor sovereignty”. The author claims that the United States’ cheap labor policy and profitability aims have destroyed Mexico’s sustainable political and economic system, increased inequality and poverty. Focusing on the impacts of the North American Trade Agreement (NAFTA), the author claims that the main aim of the international policy was to gain access to the large pool of cheap labor. Mexico entered the agreement, as “political technocrats

placed their bet for economic growth on the comparative advantage of cheap labor” (Otero, 2011, p. 385). At the same time, free labor mobility was not guaranteed by agreement, even though the economic integration started. This, in turn, resulted in a large scale illegal immigration to the United States, and the country needs to deal with the negative consequences. Based on the above analysis, it is not only developing countries that can be disadvantaged by neoliberal international politics, but developed Western states, as well. Still, through globalization, poor and developing countries can be  “worse off”.

Vogel (2009) defined three global megatrends that are happening today: the increasing globalization, rising regional, national, and global inequality, and global climate change. According to the author, all the three megatrends are inter-related. Increasing globalization results in the declining fortunes of working people around the world, growing international competition, escalation of military tension, and the corporate hegemony of national governments. On the national level, neoliberal globalization creates increased corporate influence on the state, the privatization of public services and resources, reliance of military, and class antagonism.

For those who claim that neoliberalism is focusing on increasing national and global equality, Vogel (2009) created a chart showing the level of inequality in Canada and the United States, using the Gini coefficient. Being considered as one of the most neoliberal countries, it is interesting to find that “Currently the top 1% of the population controls 25-33% of the total wealth in the nation, while the top 10% holds 71%.” (Vogel, 2009, p. 5).

There is, however, an even more interesting argument that Vogel makes related to the negative impact of neoliberal globalization: the global domination of the United States and the prospect of endless war. Based on the principle that war is a form of extending a country’s politics (Vogel, 2009), the U. S., as a sole superpower is now dominating the globe’s economic, political, and social systems. The move towards singularity and homogeneity is not necessarily in the interest of all parties.

Neoliberalism and Promoting Equality

In a recent book, Dambisa Moyo (2009) argued that international aids for foreign countries do not work, and they have no positive social, economic, or political impact whatsoever. Haque (2008) also stated that the nature of state changed globally, due to the spreading of neoliberal policies, programs, and assumptions. Emphasizing the role of international organizations and NGO-s, the author states that “In the developing world, the recent transition toward a neoliberal state and the replacement of statist governments by market-friendly

regimes have been reinforced by the unprecedented globalization of capital, expansion of market ideology, and influence of international agencies” (Haque, 2008, p. 12). Examining the impact of introducing neoliberalism in developing states through international policies, agreements, programs, and organizations, the author concludes that minimal state intervention did not decrease the level of inequality in these countries. The deeper alliance of states with private capital (domestic and foreign) based in neoliberal principles makes globalization emerge at a faster speed in Latin America and Africa. Transnational corporations benefited from the impact of neoliberal policies within these countries the most, and managed to transform emerging economies. At the same time, reducing the state’s influence on public services through privatization resulted worsening health and economic conditions of the underprivileged population (Haque, 2008).

The Impact of Neoliberalism on Globalization

Scholte (2005) also examined the relationship between neoliberalism and globalization, in particular focus on international policies and agreements. His review states that the main foundations of neoliberalism are marketism and economism, introduced through deregulation, liberalization, and privatization. While the United Nations Global Compact and other international regulations exist, most companies opt for self-regulation of their global activities. The laissez-faire market economics, however, is not equally suitable for all countries’ culture and social structure. However, as the article concludes, the deregulation impact of neoliberal globalization was not negative: it only aimed to remove rules that interfered with free market principles. This means that neoliberalism does not create chaos, instability, or lack of state power.

According to Tobias et al. (2012, p. 2), “the model of neoliberal globalization entails the southward flow of money and the northward flow of people”. This statement definitely summarizes the connection between neoliberalism and globalization. While states transform and become more democratic, they fail to create jobs and opportunities that are equivalent to those in the Global North. This stated, migration would occur, and trade agreements, international policies are the only tools that can control this movement. The author further confirms that neoliberalism does not equally benefit all social classes in developing countries. Indeed, the existing elite will attempt to maintain their prosperity and power, and this will result in existing elites gaining more wealth and for the rest of the population the standards of living decrease. This phenomenon, however, does not originate from the ideology of neoliberalism, but the country’s ability to transform its social and economic system. This means that the problem does not lie in neoliberalism and globalization, but the diverse abilities of countries to transform into a democratic state and promote equal opportunities for citizens.

Conclusion: Is Neoliberal Globalization Evil?

As Scholte (2005, p. 11) concludes, “it is difficult to isolate the impacts of neoliberal policies from the influences of numerous other forces that figure in contemporary globalization”. Based on the above review, there is little or no evidence to support claims that neoliberalism and its international implementation through globalization and international policies would create greater inequality or unfair distribution of wealth. It is also important to emphasize the fact that transforming a non-democratic state into a market-driven society and economy would not be an overnight job. Countries have different levels of ability to adapt to neoliberal principles based on their political and social structure. Globalization has created opportunities for countries and people, and – as the principles of neoliberalism include free competition of markets – there are winners and losers. Still, without neoliberalism there would be no trade agreements, no regional economic organizations, and possibly the European Union would not exist, either. All the above institutions reinforce the principles of neoliberalism. Globalization might have negative aspects, but neoliberalism creates a freedom of choice and several opportunities. Neoliberal globalization is not wrong, while it can have negative impacts. It has also been confirmed that neoliberalism uses globalization to promote its principles worldwide, while globalization is an impact of neoliberalism. The thesis statement is, therefore, confirmed.

References

Barnett, C. (2011) Publics and markets. What’s wrong with Neoliberalism? In: Scott, J., & Carrington, P. J. (eds) (2011). The SAGE handbook of social network analysis. SAGE publications.

De Soto, H. (2000). The mystery of capital: Why capitalism triumphs in the West and fails everywhere else. Basic books.

Fasenfest, D. (2010). Neoliberalism, globalization and the capitalist world order. Critical Sociology,36(5), 627-631.

Friends on Earth International (2003) Towards Sustainable Economies: challenging neoliberal economic globalisation. Retrieved from            http://www.foei.org/resources/publications/publications-by-subject/economic-justice-resisting-neoliberalism-publications/towards-sustainable-economies-challenging-  neoliberal-economic-globalisation

Fougner, T. (2006). The state, international competitiveness and neoliberal globalisation: is there a future beyond ‘the competition state’?. Review of international studies, 32(01), 165-185.

Haque, S. M. (2008). Global rise of neoliberal state and its impact on citizenship: Experiences in developing nations. Asian Journal of Social Science,36(1), 11-34.

Martell, L. (2010). The sociology of globalization. Polity.

Moyo, D. (2009). Dead aid: Why aid is not working and how there is a better way for Africa. Macmillan.

Otero, G. (2011). Neoliberal Globalization, NAFTA, and Migration: Mexico’s Loss of Food and Labor Sovereignty. Journal of poverty, 15(4), 384-402.

Rapley, J. (2004). Globalization and inequality: Neoliberalism’s downward spiral. Lynne Rienner Publishers.

Sachs, J. D. (1998). Globalization and the Rule of Law.

Scholte, J. A. (2005). The sources of neoliberal globalization (Vol. 10). UNRISD.

Smith, C. (2012). Neoliberalism and Inequality: A Recipe for Interpersonal Violence?. Retrieved from http://thesocietypages.org/sociologylens/2012/11/06/neoliberalism-and-inequality-a-    recipe-for-interpersonal-violence/

Stiglitz, J. (2013, October 13). Inequality Is a Choice. New York Times.Retrieved from: http://opinionator.blogs.nytimes.com/2013/10/13/inequality-is-a-choice/

Tobias, S., Jappah, J. V., Smith, D. T., Borcan, A., Johnson, N. C., Cheng, L., & Narayanan, R. (2012). Neoliberal Globalization and the Politics of Migration in Sub-Saharan Africa. Journal of International and Global Studies, 4(1), 1-16.

Vogel, R. D. (2009). Combating Globalization: Confronting the Impact of Neoliberal Free Trade Policies on Labor and the Environment. In From the Left: A US Forum on Combating  Globalism.