9
Inequality Chapter Among Nations: Perspectives on Development
by Gordon Laxer
Copyright 2008 by Nelson, a division of Thomson Canada Limited.
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INTRODUCTION
Will examine: Globalization and its effects Historical explanations for current gap between rich and poor countries Theoretical perspectives on global development Global disparities today and challenges ahead*
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GLOBALIZATION
Globalization: World integration of investment, production, and economic policies Policies implemented by transnational corporations: Companies with subsidiaries in more than one country*
Copyright 2008 by Nelson, a division of Thomson Canada Limited.
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EFFECTS OF GLOBALIZATION
Effects of globalization in many areas of southern hemisphere: Oppressive working conditions for many labourers reflected in: Hours worked (15 to 19.5 hours/day; 7 days/week) Type of work (repetitive assembly-line work) Lack of sufficient health and safety regulations Little to no insurance coverage Absence of workers rights (unions illegal) Copyright 2008 by Nelson, a division of Thomson Canada Limited.
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GLOBALIST WASHINGTON CONSENSUS
Argues capitalism in ascendance worldwide Mandates every country remove domestic control over economy and adopt neoliberal economic policies Dictates requirements in exchange for loans and financial aid (e.g., reduce corporate taxes; reduce government regulation of business) Allows for pre-emptive strikes on countries Copyright 2008 by Nelson, a division of threats Limited. 9-5 considered immediate Thomson Canadaor potential
NEOLIBERALISM AND ANTIIMPERIALISM
Two broad perspectives that explain poverty of some countries
1. Neoliberalism: Most countries are poor because Western capitalist institutions and values have not penetrated them deeply enough (poor countries blamed for own poverty) 1. Anti-imperialist perspective: Most countries are poor because capitalism has penetrated them too deeply (rich countries blamed for poor countries
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UNEQUAL DEVELOPMENT AND UNEQUAL BENEFITS
Growth and standard of living measured by using gross national product (GNP) or gross domestic product (GDP): Value of all goods and services produced in a country in one year as measured officially by money transactions*
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CRITICISMS OF GNP/GDP AS MEASUREMENT OF GROWTH
All monetary activity is included, whether positive or negative (e.g., growth precipitated by disasters) The focus on growth hides economic injustices: Benefits not evenly distributed across population (increases often go to wealthiest) Rise in average incomes hides poverty Copyright 2008 by incomes of Canada Limited. 9-8 (by combiningNelson, a division of Thomsonthe rich and the
CRITICISMS OF GNP/GDP AS MEASUREMENT OF GROWTH
Recent GNP growth at global level has been accompanied by: Widespread poverty Longer working hours Absence of democracy Discrimination Pollution Poor education Persistent inequality*
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HUMAN DEVELOPMENT
Human development: Alternative indicator of well-being (used by United Nations) Measures opportunities to: Work and earn income Gain an education Obtain health care Live in a healthy environment Enjoy democracy, equality, and freedom*
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CLASS AND INEQUALITY
Inequalities not only between rich and poor countries, but also within countries Widespread class differences found almost everywhere Gap between rich and poor generally greater in poor countries*
Copyright 2008 by Nelson, a division of Thomson Canada Limited.
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RICHEST AND POOREST 20% OF INCOME BY REGION OF RESIDENCE, 2003
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WOMEN AND DEVELOPMENT
Life chances profoundly affected by gender In impoverished countries, women typically: Are the poorest of the poor (are landless labourers vs. men who typically are landowners) Are subject to significant health risks during pregnancy Receive lessbyeducation than men* Copyright 2008 Nelson, a division of Thomson Canada Limited.
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MAJOR PLAYERS IN GLOBALIZATION
1. Transnational corporations 1. Powerful states (especially the USA and its allies) 1. Supranational institutions, including: The IMF (International Monetary fund) The World Bank The G7 countries (USA, Canada, Japan, Germany, France, Italy, United Kingdom) The European Union (comprised of 25 European states) NAFTA (North American Free Trade Agreement signatories include United Copyright 2008 by Nelson, and Thomson Canada Limited. States, Canada,a division of Mexico)* 9-14
MAJOR PLAYERS IN GLOBALIZATION
Control over weaker states accomplished by major players through informal colonialism (vs. colonialism one country taking over another and ruling it without consent) Dominant states exercise influence over supranational agencies and promote interests of their transnational corporations Also use diplomacy, trade, economic threats and incentives, and as last resort,
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INDUSTRY AND GLOBAL ECONOMY
Early phases of industrialization (17601960): Modern industry emerged in advanced capitalist economies Initially, profits made by continually expanding production and consumption in those countries Late 1960s: Production shifted to poor countries in response to pay explosion in rich countries 1980s and 1990s: In developed countries, industry reduced awages, downsized, shifted Copyright 2008 by Nelson, division of Thomson Canada Limited. 9-16
THE HISTORICAL RECORD
Current division between rich and poor countries is recent phenomenon In 1750, England probably worlds richest economy But countries referred today as developing accounted for 73% of global industrial production (including crafts): By 1913, figure reduced to 7.5% Decline due to rapid gains in a few countries, and decline in production of catastrophic proportions among the rest*
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THE HISTORICAL RECORD
Since the Industrial Revolution, dominant states have imposed capitalism through:
Empire and unequal trade Forcible capture of markets Manipulation of treaties and other special arrangements Superior technology
Capitalist industrialization and imperialism contributed strongly to inequality that exists among nations today*
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PERSPECTIVES ON DEVELOPMENT
Are competing development perspectives that seek to explain unequal global development:
1. Neoliberal/Westernization perspective 1. Modernization theory Dependency 1. theory*
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1. NEOLIBERAL/WESTERNIZATION PERSEPECTIVE
Liberalism: Equates capitalism with freedom and distrusts power of governments
Six core principles: i. Self-interest promotes the common good ii. Profits best incentive for innovation and efficiency iii. Market freedom maximizes human freedom iv. Free market dynamics separate productive from unproductive firms
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FOREIGN DEBT OF LESS DEVELOPED COUNTRIES
Debt problems for many developing countries since 1980s: Debts usually incurred by corrupt local officials, military dictators, and wealthy businessmen Raises ethical issues: Should citizens be responsible for debts incurred by undemocratic elites? Have economic programs imposed by dominant countries and agencies helped Copyright 2008 by crises?* 9-21 resolve these Nelson, a division of Thomson Canada Limited.
VOTING POWER AT THE WORLD BANK AND THE IMF
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LIBERALISM IN PRACTICE TODAY
Indebted countries are compelled by IMF and World Bank to adopt structural adjustment programs in exchange for indebtedness and undertaking the following liberal principles: Privatize state-owned industry Reduce state budgets and subsidies Open up economy to foreign investment Increase exports Yet programs unsuccessful in reducing Copyright 2008 by poverty (have Nelson, a division of Thomson Canada Limited. increased inequality)*
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CRITIQUE OF NEOLIBERALISM/ WESTERNIZATION
Cannot explain why so few countries that follow liberal doctrine are unable to rise to First World or advanced status Ignores that First World countries achieved their status without adhering to liberal free trade policies Is blind to inequalities of power and how they hinder equality of opportunity for ordinary people of of Thomson Canada Limited. Justifies privilegesdivision the already powerful* Copyright 2008 by Nelson, a
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2. MODERNIZATION THEORY
Argues that while liberal institutions are necessary for development of worlds poor countries, are still insufficient for instituting a capitalist economy Poor countries also need to adopt modern (i.e., Western) values, including the valuing of: Choice Objectivity Achievement Future-orientation (rather than ascription)
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2. MODERNIZATION THEORY
Other components deemed necessary for progress: Private property and individual rights Urbanization and universal literacy Modern health care Secularization and bureaucratization Shift to nuclear families Liberal democracy Independent mass media Civil service operating on merit principle*
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CRITIQUE OF MODERNIZATION THEORY
Ethnocentric evolutionary assumption that all countries must develop same way as Western countries Nave and incorrect to explain economic stagnation as result of failure to become Westernized Similar to neoliberalism, ignores power and motivation of advanced states and leading transnationals to maintain existing advantages*by Nelson, a division of Thomson Canada Limited. Copyright 2008 9-27
3. DEPENDENCY THEORY
Economies of industrial core countries (i.e., the most economically developed countries) are homogeneous (productive in all sectors) and diversified Economies of agrarian peripheral countries (i.e., less developed countries) are heterogeneous (lack consistency in performance across sectors) and specialized Peripheral countries export sector controlled by transnational corporations that define terms of trade Results is 2008 by Nelson, aenclaves thatLimited. Copyright export division of Thomson Canada perpetuate 9-28
MARXISM AND DEPENDENCY THEORY
States and corporations of advanced countries form alliances with traditional pre-capitalist elites in less developed countries Is in interests of both external (Western) and internal (domestic) elites to keep countries from industriali...