Globalisation and run financial markets. It became

Globalisation is the process of enabling financial and
investment markets to operate internationally, largely as a result of
deregulation and improved communications” (Collins). Wetherly and otter
simply define globalisation as “the increase over time of international trade
and services”. As a result of globalisation, there has been change to the
economy both nationally and internationally. This in turn has led to different debates
on the effect globalisation has. Robertson (1992) defined globalisation as “a
concept that refers both to the compression of the world and the
intensification of consciousness of the world as a whole”. As globalisation
become much more prominent, people had different views on how it would impact
society. These feelings were intensified by the collapse of communism and
technological revolution. In this essay I will be discussing the meaning of
globalisation while evaluating both positive and negative views on
globalisation by different perspectives. As well as this I will be examining
the effect globalisation has had.

Globalisation
first became recognized in the 1960’s and since then it was seen as more than
the way to do business and run financial markets. It became a process (jeffrey, 2002). Weatherly and otter
argue that capitalism played a big part in kick starting what we know to be
globalisation by fueling the industrial revolution.  Trade plays a vital part for countries and
regions that rely on trade for economic reasons. Globalisation opened up trade
barriers between countries and made the world economy more inter-dependent. This
has played an important part in establishing new countries to trade with.
Weatherly and otter approach provides six main reasons of globalization. These
include globally organized production in which business are able to establish
the best place to set up production especially in areas that labor and
production are cheap, while profits increase. Consequently, this leads to the
second aspect of globalisation which is migration.  As borders become more open, there is
increased movement as more people are able to relocate for employment and given
under developed countries access to more developed countries. People can move
from one country to another, trade restrictions are reducing, domestic markets
are opening…countries that are leading the innovations are passing their
technology to countries in need (Kulkami A..,2009). As a result, globalisation
has enhanced the efficiency, the time and the speed of communications through
rapid technological changes. We are now able to get anything we want, from
anywhere in the world delivered right to our doors. With access to other
countries, globalisation has also brought people with different cultural
beliefs together through increased trade. As a result, globalisation brings up
certain ethical problems especially between people of different beliefs.
Despite this, Hirst, Thompson and Bromley (2009) maintain that globalisation
has the “infinite capacity to increase.

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As
globalisation continues, so does the debate on whether globalisation is a good
thing or a bad thing. On one hand, Amartya Sen,
a Nobel-Prize winning economist, insists that globalisation has “enriched the
world scientifically and culturally”. (the economist.co.uk) while economists
like Joseph Stiglitz blame globalisation for “perpetuating inequality rather
than reducing it”. The
three competing perspectives that Wetherly and Otter highlight are the Neo-
Classics who believe that globalisation is a good thing, the socialist/ Marxist
perspective that globalisation is a negative thing and the Structuralist who
believe that globalisation can be a good thing but would rely heavily on national
and global structures to increase globalization in a safer way.

 

Neo
classical views are generally focused towards a more positive view that with
globalisation, comes free market capitalism all around the world and a removal
of constraints. Based on a theory of absolute and comparative advantage, neo classical
perspective ascertain that with expanding markets and greater specialization of
goods and services globally, international trade would be profitable to those
involved. This is the idea that because of free trade, two countries could
benefit with only one country needing to produce all commodities. This is the
idea of globalisation being mutually beneficial. David Ricardo (2014) approach
on comparative advantage is slightly more refined. He argues that to get better
results in production one country with larger resources can be the main
producer at the specialized product and the other less advantaged country can
still provide even with a smaller comparative disadvantage. Following David
Ricardo, two Economist’s Hecksher and Ohlin put more emphasis on advantage being
directly related to the cost of a unit of input and the output. This is the
idea that when a resource is in large quantities then the costs would be low.
In doing so, the idea of ‘international division of labour’ was born. One
implication of this theory is the ability for countries to trade freely and
specialize in products they have in abundance in order for trade to continue
opens them up to cheaper prices on production and more profit. Wetherly and
Otter draw some parallels from this and comment that “trade not only
potentially increases the amount of goods that can be produced but also
encourages increases in productivity”. Taking from this however, the
Neo-Classical perspective takes risks without thinking of a long term solution
to keep globalisation thriving. Neoclassical Economists believe that even if
the country falls into recession, the economy would be able to rebound out. The
key criticism of this theory is that it is based on assumptions and doesn’t
focus on developing countries and their problems. Consequently, this inherently
causes distrust towards globalisation as people could lose jobs as labour is
cheaper elsewhere meaning that jobs are lost and unemployment rates sky rocket.
The other perspective on the other hand is the Marxist who believe that
globalisation is economically and politically unequal due to divide between the
rich and poor. They believe that trade isn’t free and only benefits richer
nations due to “the social system of capitalism is very unequal and access of
resources are limited to the hands of a few” (Wetherly and Otter 2014).

Karl
Marx the father of Marxism argued that, capitalists would be able to exploit
their labourers and as profit goes up the workers are left with nothing while
his idea of the bourgeoisie make all the profit. The bourgeoisie has though its
exploitation of the world market given a cosmopolitan character to production
and consumption in very country… All old established national industries have
been destroyed (Marx and Engles 1848 1967:83-4) Although he was adamant that
those at the bottom would rise up and take over and put societies views first. AL
thought that was never to be. ‘Capitalism might lead to even greater problems
for workers in less advanced areas as they would be weaker than their imperial
master’. (Wetherly and Otter 2014). As globalisation becomes more popular many
countries believe that globalisation hasn’t brought any economic benefits
(Stiglitz, 2002). Marxist Economists believe that globalisation has meant that
we have moved on to a dependency tradition in which we still lived in a world
system that still continues to suffer from being exploited.  The Marxist argue that the legacy of
colonialism left economies still lining the pockets of the elite. They believe
that with Globalisation, comes rules that do not protect developing countries
with less wealth. Which leads to larger countries dominating governing bodies
in order to frame the rules in their favor. One example would be the historic
part Britain played during the colonisation. With
colonies spread over the globe, Britain was able to use power and the financial
backing of big businesses back in Britain that were currently going through the
industrial revolution especially in the steel business. They found that they
could profit both at home and worldwide.

 

This included taking control,
changing the laws to suit their agendas and profiting from the resources in the
country they colonised. This ranged from coffee, cotton, sugar and tobacco. As Malachy Postlethwayt, the political economist, candidly put
it in 1745: “British trade is a magnificent superstructure of American
commerce and naval power on an African foundation.” (the guardian.co.uk).
A recent example of this is the use of cheap sweat shops used by major brands
like Zara and urban outfitters in countries like India (which had also
previously been colonised by Britain). These big companies then keep cost of
production to a minimum. By monopolizing on rates of poverty they are able to
offer jobs to the locals and return they offer hard labour and exploitation. Foreign
companies… were encouraged to build zones and produce goods for the outside
worlds (Meredith 2003:23) The International
Monetary Fund admitted in 2007 that inequality levels may have been increased
by the introduction of new technology and the investment of foreign capital in
developing countries (the economist.co.uk). ‘The balance between state and
markets should be restored. The world is still round and not becoming flat’ (Stiglitz,
2006:1740).

Structuralist
on the other hand don’t have much of a definition on exactly what globalisation
is but take the middle ground and argue that globalisation could be a benefit
however certain things have to change in order for a more “level playing field”
Wetherly and Otter (2004). Not all countries are on the same level in terms of
their economic structures or technological advances. Without access to the same
resources and no plans in place to support them, more countries are at a
disadvantage. Although unlike the other perspectives, they believe that
globalisation has no individual cause. Held,D (1999) weighed that the outcome
of process is not determined. More recent groups like the transformationalists
argue that globalisation has no direction as it can change and evolve as
globalisation has done. Another sociologist of modernity,
Beck, believes that the unintended effects of modernity forces are global risk
and the new global threat. In order to overcome the risks, as important
dimension of reality, it is necessary to create institutions of democracy. Globalisation will change the way
we live.

 

Globalisation
is forever evolving in the world we live in. with new technology and more open
trade we are able to conduct business much more easily, a lot faster and from
anywhere on the globe. This has meant more jobs and money into the economies of
third word companies. However, globalisation does bring up ethnical issues.
This links back to Wetherly and Otters aspect of globalisation in terms of
migration and cultural flows. With migration you have the problem of racial
abuse and tensions brought on by different beliefs unable to co-exist together.
This in turn also links to the rights that workers are given in exchange for
their labour. Corruption and abuse of market are two effects that globalisation
has shown about society as a whole, which stresses the importance of Government
CSR policies which would cause mot stability. Wetherly and Otter summarized
that in order for us to keep up with the large number of trade coming and out,
the only way to understand is if we understand capitalism on a global scale in
order to profit.