Globalization and Social inequality - Essay Example

Globalization and Social inequality are inextricably connected” To what extend do you agree? Introduction One of today’s main issues: the North versus the South. Developed Countries against developing countries. We often see this problem as a confrontation between two parties: one which has everything and the other one which wishes to be part of the wealth distribution. One of the driving forces of the struggle is globalization. We will discuss this term along with social inequality in the first part of our essay. As we shall se both of these definitions require a point of view, as a base for the debate. Joseph E. Stiglitz in “Globalization and its discontents”1 explains that when we talk about globalization some critics may emerge regarding the fact that people, in developing countries, are working for international companies for a miserable salary and that this should not be the effects of globalization. On the other hand, Stiglitz states that defenders of globalization may object to this statement because these people, even though their salary is seen as ridiculous compared to Northern standard, are offered a chance to have a job and are paid a higher wage than they could receive if they worked in a national company of their own country. As we can see, globalization is really about taking sides. However, we will try to be thorough and we will present both these point of views in our essay. In a second part we will discuss the connection between globalization and social inequality. In a third part, we will focus on the possibilities offered by globalization to diminish the social inequalities. In our conclusion we focus on the different aspects which we would have described in our essay and will present our own point of view. I. Definitions of terms Globalization Horst Köhler, Managing Director of The International Monetary Fund defines globalization as “a process of increasing international division of labor and the accompanying integration of national economies through trade in goods and services, cross-border corporate investments and financial flows. This integration is boosted by technological progress, in particular in transport and communications. Ideally, globalization is a win-win proposition, in which all economies ultimately benefit through productivity and growth effects”2. Meanwhile, The International Forum on Globalization defines it as “the present worldwide drive toward a globalized economic system dominated by supranational corporate trade and banking institutions that are not accountable to democratic processes or national governments.”3 As we stated earlier in this essay, definitions of globalization differs according to the point of view of the author. Nevertheless, we believe that the following definition could be seen as accurate as it doe not confines globalization to just an economic process: “(Globalization) refers to the worldwide phenomenon of technological, economic, political and cultural exchanges, brought about by modern communication, transportation and legal infrastructure as well as the political choice to consciously open cross-border links in international trade and finance. It is a term used to describe how human beings are becoming more intertwined with each other around the world economically, politically, and culturally.”4 Social Inequality It is very difficult to give a proper definition of social inequality as it embodies different definitions. Some may see social inequality as disparities within as society, others between nations. As our essay is mainly focused on globalization we will choose the later as our base of analysis. Nevertheless, we will be inclined to discuss inequalities within a society as a result of globalization. We will therefore consider social inequality as inequality among individuals coming from different countries. The debate is also centred on considering whether social inequality should thought in terms of equality of opportunity or equality of outcome. In our essay, we will consider both of the aspects to reach a clear understanding of the situation. Naturally, the term social associated to globalization will lead us to define these inequalities as economic as we believe they can not be separated. As the title of our subject is “Globalization and Social inequality are inextricably connected” and as we believe that social and economic inequalities have always existed in nature, we will focus on globalization favouring social and economic inequalities but not creating them. Because, we believe that the inequalities have exploded due to globalization if we examine Branko Milanovic’ statement, cconomist at the World Bank, in The Economic Journal: "The richest 1 percent of people in the world receive as much as the bottom 57 percent, or in other words, less than 50 million richest people receive as much as 2.7 billion poor."5 That is also why, we will focus on the possible answers to social inequalities offered by the globalization. II. How can we connect globalization to social inequality? In the growing globalized world, we can see one factor which can strike us by its unity. We can consider several countries but it will remain unchanged. As Susan Strange states in “The Global Transformations Reader: an introduction to the Globalization Debate”6, the state has lost its power due to a technologic and a financial dynamic. The technology has changed the global financial structure of our world and governments make alliances with international firms because they are the only one to produce sufficient wealth. In other words, the state has lost its power over the economic and social policies because of the market it has helped to create. The globalization has therefore developed a context where there are no more masters, but only players who make the market:”The impersonal forces of world markets, integrated over the postwar period more by private enterprise in finance, industry and trade than by the cooperative decisions of governments, are now more powerful than the states to whom ultimate political authority over society and economy is supposed to belong.” From that point of view, as we believe that the states should be the institution to promote social equality by the use of policies, we can therefore understand how globalization has taken away that power from the state and therefore enhanced social inequalities. But what is the most striking is the globalization can not only affect inequalities separating the North from the South but also widen the gap of inequalities of opportunity among them as we shall see through this example: The Multi Fibre Agreement as an example of the social inequalities caused by globalization. On January 1st, 2005, the Multi Fibre Agreement (MFA) expired. The MFA was a measure taken regarding the world trade of textiles and garment from 1974 to 2004 which imposed quotas on the amount that developing countries could export to developed countries. It was first introduced in 1974 as a short-term measure to help developed countries to control imports from the developing world that has a strong advantage in textile production. The textile production is labour intensive and the developing countries have low labour costs. According to the World Bank and the IMF, the system has cost the developing countries 27 million jobs and $40 billion a year in lost exports. The World Trade Organisation admitted that the MFA was a special regime outside the GATT rules and that WTO members have committed to remove those quotas by 1st January 2005. Nevertheless, the MFA was not negative for all countries. The United States, for example, imposed no restrictions on imports from the poorest countries like Bangladesh, benefiting to a massive expansion of the textile industry there But since the end of the quotas, the gap between developed and developing countries is not very clear. When some could believe that the dismantling of the MFA could have been a relief and a real opportunity for Southern countries, it appears that the situation is much more complex. There is one main reason for the difficulties facing the textile market within developing countries: competition. As the international market is now wide open, each developing countries wants to be part of this profitable business. However, not all of them can compete with giants like China. According to a publication from the OECD “A New World Map in Textiles and Clothing” when the MFA was still in place, smaller developing countries took advantage of the quotas because this system penalised the more competitive suppliers. When the quotas from a country like China was reached, importers turned to less competitive suppliers located in countries that had spare export quotas and whose only advantage was low wage. Today, the less competitive developing countries are not called as back up because countries willing to import textile can only be supplied by one and only exporter, the most competitive: China. As we stated before, the main issue here is competition. What separates China from other developing countries id not only the competitive advantages of low wages. In “China Shows the Way in a Quota-Free Market”7, Linda Lim presents six competitive advantages that China has over the other developing countries: First, Chinese workers are much more productive, probably because they are better-educated, better-motivated, and have better health status, given the legacies of the socialist state. Second, Chinese factories benefit from economies of scale, given the large production base and domestic market afforded by the countrys huge population. Third, Chinas large, diverse, and increasingly integrated industrial base means that many materials required to make clothing are locally available, avoiding the added costs, risks, and longer delivery lead-times that imported inputs impose on other countries. Fourth, Chinas geographical location, close to Japan, Korea, Taiwan, and Hong Kong, allows it to readily import advanced equipment and high-tech textiles for its finishing industries. Fifth, the predominantly Hong Kong- and Taiwan-based manufacturers in the global industry may have language and cultural advantages managing Chinese workers, and thus may be willing to invest more in China. Sixth, China has also invested heavily in its physical infrastructure, allowing speed of delivery of both imports and exports. (Chinas currency, pegged to a now-declining US dollar, is not a significant factor in its cost competitiveness; the undervalued Yuan raises the cost of imported inputs, on which manufacturers rely heavily.). It is therefore a complex challenge we face, not only we encounter social inequalities when comparing the North to the South, but we also find strong inequalities in opportunity within the South. It is impossible not to see that these inequalities are a direct consequence of globalization. However, in the following part, we will try to discuss how globalization can be seen as a tool, and not an obstacle, to reduce social inequalities and even reach an international standard. III. How can globalization diminish social inequalities? Earlier in our Essay, we quoted Susan Strange and how she presented the international companies as the true market makers today. If we consider this statement to be true, in the case that international companies are creating social inequalities, it is mainly because we observe that these companies come from developed countries. However, should this statement remain accurate in the case of international companies from developing countries? One month ago, the Indian steel company, Mittal steel, launched a hostile takeover the European steel group Arcelor. If we consider that the gap separating Northern from Southern countries is mainly a consequence of the existing international companies based in the North, what would be the results of growing international companies in the South? In the case of Mittal Steel, it could mean a better quality of life for Indian workers of this company, therefore shortening the social inequalities for this country. On this issue, it is important to understand how a welfare states functions and it is crucial to have in mind that welfare is not a direct consequence of the social policy led by a state. In “Comparative social policy: theory and research” from Patricia Kenett8 we have a pertinent explanation of a welfare system: “It is important to understand the structure of welfare, its composition and the complex and changing patterns of relationships between different producers. The state is not the sole institution to provide welfare in a society; it derives from a multiple of sources. Baldock et al. (1999) have suggested the concept of welfare system which they define as the range of institutions that together determine the welfare of citizens. Amongst these are the family and the community networks in which it exists, the market, the charitable and voluntary sectors, and the social services and benefits provided by the state.” In the same article9, she argues that the European Union drives toward a harmonization of social policy. Nevertheless, each member has its own specifications regarding trade union movements, political parties, gender relations, religion, culture and tradition. Considering that the supranational states as the European Union are answers to globalization needs, we can therefore conclude that globalization is also creating a better environment for social policies and therefore breaking some existing inequalities. We can easily argue that countries such as Poland or Czech Republic did not have the same social benefits as France has, before joining the European Union. Now, we can conclude that there are on the path to get them. As we saw earlier, Globalization shall not only be seen as free trade, i.e. from an economic point of view, as globalization is also seen as the increasing exchange of information and individuals. On an individual level, social inequalities can be abolished because one can have a larger access to knowledge, education and information. A person can travel around the world to promote his abilities. The example of Indian web programmers warmly welcomed to the United States for their skills is an excellent argument. Gender, race, religion are not seen as a social boundary in the globalized world. Skills, abilities efficiency within a particular field are recognized as social inequality busters. Very nation have immigrant policies, these policies were created after gigantic flows of immigrants conquered what they considered to be “dream countries”, aiming for better lives and a better living. Today, the same immigrants who looked for a better like would not have to travel, as they could find a better life where they already live. According to Pippa Noris in her article “Global Governance and Cosmopolitan Citizens”10, people wherever they may come from, have more confidence in International Organizations and Institutions to help them, rather than in their own national government. But this result of a globalized world is confronted to the rejection by two thirds of the questioned cohort to free trade, and emerges a need for a more protectionist state. This is one of the numerous contradictions which one is faced when questioning the benefits and the risks of globalization. Conclusion Reviewing all the statements that are part of our essay, it is difficult to truly admit that Globalization and social inequality are inextricably connected. We have found in part II that social inequality between nations can be a direct result of globalization. However, in part III, we have described the rising opportunities brought by globalization to people who are facing social inequalities, inequalities of opportunity and outcome. Ultimately, we are once again facing Stiglitz statement and the solid conclusion to our essay brings us back to our opening statement. Profiting or suffering from globalization is a matter of point of view though one can not argue that globalization has increased all the existing process in terms of finance, information, employment, education, knowledge, culture and so on. The true challenge when facing social inequality in the globalized world is a complete understanding of the globalization process. Reaching a clear understanding of globalization will help in the creation and application of strong social policies which will help destroy all of the inequalities. Even if this might sound an utopia, such policies are at reach if we can make all the actors of globalization t get involved because as we quoted Patricia Kennett earlier in this essay, welfare does not only come for the state. We are participating to someone’s welfare. Work Cited Page International Forum on Globalization “Globalization” available at : http://www.ifg.org/analysis.htm Kennet, Patricia. “Comparative Social Policy”Open Univeristy, 2001. Köhler, Horst. “Towards a Better Globalization” Speech. Tübingen, October 16th, 2003. Lim, Linda (February 21, 2005) China Shows the way in a Quota Free Market, Yaleonline , available at http://yaleglobal.yale.edu/display.article?id=5310 Milanovic, Branko. “True World Income Distribution” The Economic Journal, Volume 112 Issue 476 Page 51 - January 2002 Noris, Pippa. “The Global transformations Reader: an introduction to the Globalization Debate” Global Governance and Cosmopolitan Citizens David Held and Anthony McGrew, Polity Press. Page 287-297. 2003. Stiglitz, Joseph E. “Globalization and its discontents” W. W. Norton and Company; 1st edition, June 2002 Strange, Susan “The Global transformations Reader: an introduction to the Globalization Debate” The Declining Authority of the States. David held and Anthony McGrew, Polity Press. Page 127-133. 2003. Wikipedia “Globalization” available at: http://en.wikipedia.org/wiki/Globalization Read More