Globalization and Transnational Capitalist Class - Literature review Example

Globalisation and the State Table of Contents Transnational capitalist class 2 Great depression of 2008: Capitalism Perspective 3 Shifting imperial order: Fall of the US Empire 4 Sustainable development in business 7 Reference List 8 Literature review Transnational capitalist class The transnational corporations and transnational capitalist class (TCC) are at the root of the ideology of consumerism and the modern culture of business world. Consumerism and transnational capitalism jointly act as the building blocks of the modern dynamics of today’s business world. The term “global system theory” (Sklair, 2007, p. 67), indicates that in the modern business world, there exists a standard system according to which most of the business activities are conducted. This term provides, in a nut shell, the idea of capitalist globalisation. The transnational capitalist class consists of four segments. These are the owners and affiliates of the transnational corporations that control the business objectives and activities of these corporations; politicians and bureaucrats from different nations; professionals working globally in different sectors and finally the consumerist elite class consisting of rich merchants and media professionals (Sklair, 2001). The transnational capital has become an important part of the capital endowment of the world. Different classes in the Marxist understanding refer to the divisions among workers all over the world on the basis of the relation they have with the social production function (Fouskas and Gokay, 2012). The translational capitalist class has no national boundaries and they are forerunners of the modern spree of globalization. This new bourgeoisie class is recognised as the capitalist class and they represent the transnational capital. The divisions of the transnational capitalist class from across the globe have combined together and acted in different ways which have created the discourses of globalisation over the course of time. With globalization, competitiveness has increased rapidly triggered by the interest of increasing global capital (Bakan, 2005). Currently, corporations are working with the profit objective and are adopting such avenues in business that would allow them to maximise private profit. However, recently, the concept of sustainable development has evolved and companies are now concerned about the sustainability of their business activities (Robinson, 2003). Great depression of 2008: Capitalism Perspective Various economists and researchers have studied the phenomenon of the global depression which was a consequence of the large scale financial crisis that occurred during 2007-2008. The global depression of the 2008 has been viewed by many scholars under the light of the global capitalist theory (Krugman, 2009). The rise of the transnational capital and transnational capitalist class has led to the emergence of a “globally integrated production and financial system” (Robinson, 2012). According to the reports published by commentators of events of economic and political significance in the world, the crisis has its roots in the sub-prime loan fiasco in the United States that had surfaced in mid-2007 (Jones, 2004). It has been emphasised that the financial debacle had been taking its shape for a long period of time even before it came to public notice in mid-2007. The overall global recession followed inevitably and remained effective over the next year. The original cause of the crisis lies deep in Marxist understanding. It can be stated with evidence that the crisis situation was a result of contradictions of state power and over-accumulation. Capitalism strives and progresses by the means of capital accumulation. However, over accumulation of capital restricts the direct productive involvement of human capital in the process of the production. Due to over accumulation, the economic system cannot expand. Marginalization of a considerably high portion of the working population from direct productive participation and downward pressure on wages leads to polarization of the flow of income in the global economy. It has increased capitalist consumerism in the world while reducing the ability of international market to absorb the output created by the global production system (Hill, 2011). The rise of capitalism lies in the successful separation of the producer from the products produced by him. However, if this power is not restrained, it would lead to the outcome in the form of the social polarization that occurred during 2008 global crisis. It is accepted that the economic situation of the world was vastly different from the current global scenario of the 21st century when Karl Marx had studied the political setup of the world and analyzed the role of capital in development of the economic force. Since then, the world has undergone various changes, in terms of the political system, pattern of trading and business across borders and status of the working population. This in turn alters the economic forces working in the economies all over the globe. However, the essence of Marxist theories of capital provides a strong insight into the formation of capital and its use for the development of the capitalist forms of production. The concepts laid down by Marx are useful enough for the understanding of the internal mechanisms of capitalism. Thus it would help to understand the causes and situation of crisis better. Shifting imperial order: Fall of the US Empire Power of the State has undergone significant changes since the occurrence of over-accumulation of capital, particularly in the West. Even several years after 2008, wide-ranging debates still continue to find their places in the studies and discussions of politicians, economic theorists, market observers and scholars (Douthwaite, 1996). These debates are generally centred on the evolving nature of business in the 21st century and the impact they have on the global order and power of states (Hill, 2011). The global financial crisis has acted as a changing tide for the global economy. During the 2008, the rupture of housing bubble in the US has been the apparent cause of the financial breakdown of the company. The effect of this bubble burst has rapidly metamorphosed the economic condition of the US and pushed it down to the worst condition of recession, since the Great Depression. Several significant aspects can be identified that has led to the depression. Perception of the economic agents about the trend of economic activities during the years when the US economy was passing through a phase of boom and their expectations regarding the future of the economy play an important role in the trend that the economy reflects in the future. The researches had claimed that the economic growth of the economy has not benefitted the poor income levels sufficiently. Therefore, when the economy failed, it had affected the poor income groups the worst. According to the concept of Marx, in the modern business world, the workers are the proletariats while the employers represent the capitalist class. Various complexities along with interlinked factors acted as the key causes for the occurrence of the financial debacle in 2007-2008. Some of these are global imbalances in the processes of accumulation of wealth or capital asset, misperception of risk in financial transactions and sloth in financial regulation. This indicates that the power of the state had been reduced considerably as the economy became market oriented. The affectations of financial collapse have been associated with the incidence of rising unemployment in the US. Various studies show that the impact of the breakdown of the economy has affected the working class the worst. There has been rampant unemployment and consequently the consumer spending has drastically fallen. The capital accumulation shows a biased picture, where the flow of economic activities is misbalanced (Klein, 2000). The level of economic activities has fallen to a level where a significant proportion of the current working generation has been devoid of their source of income and there is a huge uncertainty about employment opportunities for the future generation. It is a cyclical phenomenon. Lack of income sources has reduced the current level of aggregate demand, which in turn has detrimentally affected the level of economic activities in the economy. This implies that there would be fewer scopes of productive engagement for the new generation from the working class (Verick and Islam, 2010). In this context, until recently, the state has played a little role to improve the employment conditions in the economy. The state has been rather depended upon the actions and responses of the market in order to cope up with the changes in the economy. There has been varying impact of the financial breakdown on different economic classes in the country. This diversity arises due to differences present in the initial conditions of the different economic agents, their vulnerability to the economic conditions, the transmission channels through which information and benefits are transmitted across the classes. The government has played an insufficient role in dealing with the downturn. The position of power has shifted from the government and moved to the forces of the market. Although the US is a market economy, the recession has cast a strong and undeniable effect on the market. In condition as such, the market forces are short of casting influential impact to set the economic forces of the country right. In the last decade, the Federal Reserve has realised the impetus to take active steps for the improvement of the economic condition of the country. Since then, the government has been adopting accommodative monetary policies and modifying its fiscal policies to boost up the level of economic activities in the economy. However, the power of the government has been restricted by the rising importance of the capitalist forces. The bourgeoisie capitalist class believe that capitalism is the final route for future advancement and under this system, the concept of equality is ruled out. Hence, only the strongest in the working class would be fit for survival. This is harmful for a sustainable development of the economy. This creates certain hindrances in the path of development in the recovery phase. These risks are powerful enough to derail the economy from its path of recovery. These risks pertain to the problems of public debt incurred by the economy and might further suppress the attempts made towards growth (Starkey and Welford, 2001). Sustainable development in business Karl Marx had expertise in both economic ideas as well as philosophical thinking. He has provided us with the theory of the economy and linked it with the workings of the society. Marx has provided a detailed description of how the economy works as well as an elaborate account of the capitalist way of economic progress. The nature of capitalism, according to Marx, is that it survives as long as it accumulates capital. Hence, the essence of capitalistic nature of economic progress was continuous accumulation (McIntosh, et al., 2003). This is an unsatisfactory development for the world economy since it ensures further profit of the capitalist class at the cost of the proletariats (Dicken, 2010). The basic notion of sustainability is violated when the poor grows poorer in the process of the rich growing richer. In Marxism, there is no concept of growth limitation. Business decisions can be made sustainable once it gives up on the use of capitalist violence and seriously considers the needs of the entire society besides pursuing the profit objectives. Reference List Bakan, J., 2005. The corporation: The pathological pursuit of profit and power. London: Constable. Dicken, P., 2010. Global shift. London: Sage. Douthwaite, R., 1996. Short circuit. Devon: Green Books. Fouskas, V.K. and Gokay, B., 2012. The fall of the US Empire; global fault-lines and the shifting imperial order. London: Pluto Press. Hill, C.W., 2011. Global business today. New York: McGraw-Hill. Jones, G., 2004. Multinationals and global capitalism. Oxford: Oxford University Press. Klein, N., 2000. No logo. London: Flamingo.  Krugman, P., 2009. The return of depression economics and the crisis of 2008. New York: W.W. Norton. McIntosh, N., Thomas, R., Leipziger, D. and Coleman, G., 2003. Living corporate citizenship. London: FT/Prentice Hall. Robinson, W. L., 2003. Transnational conflicts: Central America, social change and globalization. New York: Verso. Robinson, W. L., 2012. “The Great Recession” of 2008 and the continuing crisis: A global capitalism perspective. International Review of Modern Sociology. 38 (2), 169-198. Sklair, L., 2001. The transnational capitalist class. Oxford: Blackwell. Sklair, L., 2007. The transnational capitalist class and the discourse of globalization. Cambridge Review of International Affairs, 14 (1), pp. 67-85. Starkey, R. and Welford, R. 2001. The Earthscan Reader in business and sustainable development. London: Earthscan Publications. Verick, S. and Islam, I., 2010. The Great Recession of 2008-2009: Causes, Consequences and Policy Responses. [pdf] IZA. Available at: < http://ftp.iza.org/dp4934.pdf > [Accessed 24th October 2013]. Read More