Chapter 16

Globalization

Globalization

1) What does a global economy mean?

All countries are inextricably linked: through what we consume, through employment and resources.

Globalization

Theories of:

A) Modernization thesis – wealth is produced through a decrease in hunting and gathering or agricultural economies.

Increases in: Industrialization Democracy Education Advanced cultural traits that value hard-work,

consciousness of time, investment and consumerism.

Globalization

Continued of Modernization theories

World Bank and International Monetary Fund emerged after WWII to encourage development. WB loans money while the IMF creates structural adjustment loans (conditions on accepting money) to ensure development occurs.

Globalization

Modernization theories continued….

Critiques: Evidence shows that the money given to countries is not consistent with

the four characteristics needed for development. Thus, money is commonly given to countries that are dictatorial rather than democratic

Chile – Allende was killed and replaced with Pinochet Congo – Lumumba was killed and replaced with Mobutu Iran – Razmara was killed and replaced with ShawThis has caused destabilization in the regions in which leaders have been

overthrown.Evidence also demonstrates in some countries that SALs lead to more

problems rather than less. For example, Phillipines.

Theoretically, this argument is considered ethnocentric. People’s wealth is not only measured by GNP

Globalization

B) World System Theories – Affluence of rich countries in the contemporary

world results from long term economic exploitation of poor countries. Thus, rich countries only “help” when they make poor countries dependent on them.

Richer countries imperialize and colonize – taking raw materials (pineapples, chocolate, coffee, tea) and seeking cheap labor (encouraging slavery and internal violence by supporting dictators at the expense of leaders who are more populist in nature)

Globalization

World Systems Theory continued…. Criticism – While some policy by richer countries harm

developing world, this theory only sees poor countries as victim to powerful country. Does not also include the harm created by leaders in those countries.

Globalization

U.S. Trade Policy tends to be written so that U.S companies benefit at the expense of others:

NAFTA, CAFTA, GATT – mobile businesses, not workers. Chapter 11. Subsidies allowed by US government to its farmers, but not

other governments to their farmers.

World Trade Organization (WTO) – Meetings by Global leaders that make international trade policy.

G8 Summit meetings – again leaders by 8 largest economies to decide upon trade policy

Read Article about “Saving Africa.”

Capitalisms

There are many ways to organize capitalism. The U.S. is considered “Supply Side” because policy is written to favor businesses more than workers. But Sweden is considered more “Demand Side.” Let’s look at the Continuum.

Capitalisms Continuum

1) More towards Supply Side

France Businesses– Dominated by a few industrial giants and

lots of small producers.

Government– State controls banks and who borrows money. State controlled healthcare, family leave policies and daycare help.

Labor – Like the U.S, there are multiple unions that exist in major companies. Membership is low because RTW country (essentially). But there is more of a culture of strikes and resistance on the part of workes.

Capitalisms Continued

More towards Supply Side

Japan Business – Two primary sectors: Core sector (1/3 workers,

primarily men) which is made up of quality work circles, life-time employment, benefits. Periphery sector (2/3 workers), like our marginal workers.

Government – Ministry of International Trade and Industry strategizes long-term business ideas. Govt controls banking and coordinates efforts in different industries and educational system. National health care

Labor – Company unions; pressure to be committed to company.

Capitalisms Continuum

More towards demand side

Germany Business -- Structure requires cooperation between labor and

business. Employee Associations and Work Councils. In large businesses, workers have 50% representation on decision boards. Work councils have power over personnel matters (scheduling, vacations and pensions).

But workers have least say over introduction of new technology., plant layout. Plant closing and openings.

Govt – negotiates, nationalized health care, family leave.

Labor – Collective bargaining occurs in unions. Wages and hours are negotiated. Strikes are allowed. Union operated banks control investment decisions. Unions control training programs and give workers sabbaticals for retraining.

Capitalisms Continuum

More demand side

Sweden Business – Autonomous work groups of 15-20 workers build

entire product. Workers have autonomous voice from management.

Government – 1976 Co-determination law – Any decision affecting employees, including introduction of new technology, plant layout. Plant closing and openings. Full employment, nationalized health care, family leave.

Labor – 85% of eligible workers are in unions. Unions help with dissemination of information, negotiation and cooperation.