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Globalization refers to the ease and ability of businesses to acquire sources of raw material, manufacturing facilities, services and markets for their goods and services anywhere in the world. This ease has been brought about by the developments in transportation and communication technologies that have made instantaneous sharing of information and material over large geographical distances possible. Along with these developments, political changes have made markets less defined by national borders and natural boundaries. At the global level, countries have decided to bring down barriers to free movement of labor, goods and capital in the form of reduced taxes, tariffs, quotas and other protectionist measures. Along with this, to encourage unrestricted international trade, countries have to encourage imports that may be cheaper than locally manufactured goods.
Globalization policies are the result of the neo-liberal order that was espoused by Reagan and his supporters. In the United States, the Republicans have supported the neo-liberal policies in opposition to the somewhat social welfare policies of the Democrats. The neo-liberal order strives to create an economic order where the state has almost zero involvement in the economy. It seeks to bring an end to government support programs for the poor, no state level employment or education and health facilities, and no incentives or protection against competition for domestic businesses. In doing so, the neo-liberal order aims to create an environment where individuals and businesses compete for survival solely on the basis of their resources and adaptability. Naturally, this favors large businesses with vast amounts of capital and resources while smaller businesses with less developed technology and means of production are unable to compete on an equal footing.
Under the neo-liberal order, the state is required only to act as the law enforcer so that business contracts and rights can be enforced. In addition, the state has no role to play in social welfare or social justice. The neo-liberal order delegates that role to the individual or community level to make individuals and communities responsible for their own social welfare. The concept of the welfare state emerged to perform social security and social work functions as the business community played a more assertive role in the state after the Second World War. However, in the neo-liberal order the state has to forgo this responsibility as the private sector is expected to perform this function more efficiently. This is disadvantageous as the vulnerable sections of society cannot be expected to assume responsibility for its own social welfare when it has no effective control over the resources necessary for the administering of social welfare programs. As basic services like education and health become commoditized under the neo-liberal order, the deprived sections of society are going to become even more unable to look after their own welfare and to learn new skills to survive in the absence of government employment.
Citizenship entails the entitlement to certain rights and services against the state. In other words, in return for loyalty from its citizens, the state has to provide some services to the citizens. This has been incorporated into the model of the state in the twentieth century and in the social contract between the citizen and the state. Under this social contract, the state is responsible to provide such services to the citizen without which the citizen cannot be protected against scarcity (UNHCHR, 2012). In the modern state, these rights took the form of the right to education, health, political and social freedoms and so on. The state ensured that all citizens would be provided these services as their right against the state. The universality of these services and rights also meant that the citizens viewed themselves as a single community and experienced greater solidarity and collective identity. However, with the neo-liberal order shaping economic and political policies, the role of the state has been redefined as an enabler for market forces. As a result, the rights and entitlements of the citizenship have been nearly abolished. Services like food and fuel subsidies, subsidized education and health services have been privatized with the relationship between the citizen and the state transforming into a commercial one. With each individual responsible for themselves, the collective identity is now replaced by a sense of competition over scarce resources. The concept of intergenerational rights of citizens has also been destroyed because of which efforts at conservation of resources have also suffered.
Prior to the neo-liberal order, the state also assumed responsibility to protect the interests of racial and ethnic minorities against racial discrimination and exploitation in employment, education, health and other aspects of civic life. Such protection is necessary to provide the minority communities opportunities to make social progress. However, the neo-liberal order does not sanction any such protection of minorities. Under the neo-liberal order, the state has no responsibility other than that to enforce the law. Apart from that, each individual is individually responsible for his or her own welfare and social progress. Such a move puts the minorities in a particularly disadvantageous position because they are typically marginalized and do not possess a high level of skills or education to compete with the majority. Their chances for social progress are severely constrained as they lack the economic and social resources to survive in the competitive neo-liberal environment. The result is that such individuals are exploited by businesses for whom they work at low wages and with little employment benefits.
Category 2: Question 1
Global institutions like the WTO, IMF and World Bank are dominated by the developed nations and led by the only superpower on the globe, the United States. These institutions were also created after the Second World War, when the United States through its defeat of Japan had become a major world power. The creation of these institutions was also the result of the United States' efforts towards creating a global organization for regulating the economic stability of the world and to prevent another global conflict. It is natural for these institutions to be motivated by the liberal economic agenda of the neo-liberal class. These institutions have sought to help developing countries of the South by requiring them in return to liberalize their economies. At times, these measures have proven to be helpful. At others, the economies have suffered although inflow of foreign direct investment has increased.
North-South relations have a long history of economic relations, particularly during the colonization period when large swathes of Africa and South America were colonized by European powers. The colonizers were interested in the gold, silver and other mineral wealth of these regions and so the relationship was exploitative. After the end of the colonization period when the countries of Africa and Latin America gained independence, economic relations between the North and the South became comparatively fair. However, the trade relations were then based on the sympathy of the South countries for America-led capitalism or Soviet-led socialism. During the 1960s, such loyalties and dependencies prevented regional integration from taking place, while the economic development of national economies relied exclusively on export of raw materials to the North and import of manufactured goods from them. In subsequent years, the countries of the South decided to pursue a policy of import substitution where they sought to change the unfavorable balance of trade in their favor.
One reason for the balance of trade continuing to flow in favor of the North was that the rivalry between capitalism and socialism caused the leading superpowers to tolerate autocrats and dictators in many of the countries of the South in return for loyalty. In return, the North continued significant levels of financial flows to the countries. Thee inflows, however, were spent less on economic development and human rights and more on increasing the personal store of wealth of the dictators. As a result, during the 1970s, the North may be said to have contributed to the poor economic and human rights development in the countries of the South.
During the 1980s, the world economy had been liberalized and as a result, credit was freely available to all countries. The countries of the South sought this credit to develop their economies after the oil crisis of the 1970s. However, the high levels of credit eventually led to economic crises in many of the countries. This was the point where the Bretton Woods Conference set in to pursue their liberal agenda in restructuring the traditionally socialist economies where resources were protected by the state. The organizations like the World Bank and the IMF prescribed economic policies and remedies for these countries that would suit the ideals of free trade and globalization being pursued by the WTO at the same time. They presented a picture that a liberalization of the economy and reduced public expenditure would attract heavy foreign direct investment from the wealthy North. This investment would result in economic development through an increase in jobs, resource utilization and infrastructure development. As laws would be formed to attract foreign investment and integrate the economy into the global…[continue]
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