The Global Economy

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Introduction

Fundamental questions arise as to whether the world economy is becoming more globalized, internationalized, westernized and neo-liberalized. In this paper, this paper will present a very critical and comprehensive discussion in an attempt to answer this question. It will analyze the global economy from the view points of the radicals, skeptics, and pragmatics. The fact that globalization is making the world a global village is not in doubt. As such, it does bring different people of diverse economic backgrounds together and shapes the world’s economic thought patterns a great deal.

Global Economy Defined

A global economy can be defined as a worldwide economic activity that goes beyond the boundaries of countries and regions. It is characterized by liberalization, free trade, globalization of economic activities, connectivity, borderless globe, composite processes, multi-dimensional processes, and strong presence of the civil societies and groups (Bauman, 2000; 26). Various scholars subscribing to different schools of thought have different viewpoints with regards to the globalization, internalization, neo-liberalization and westernization of the world’s economy.

A Globalized World Economy

Globalization is not a new phenomenon in the 21st century. It refers to the process of international integration that arises from the interchange of the global products, world views and cultural aspects. Globalization is a phenomenon that has been made possible by the constant and continuous improvements and inventions in the fields of transport and communication. The new information and communication technologies have shrunk the world into a form of the global village where people meet and conduct business easily on a global scale (Archibugi, and Michie, 1997; 45). The question as to whether the world’s economy is becoming more globalized is answered from the viewpoints of different scholars.

The radicals argue strongly in favor of globalization and believe that the world’s economy is becoming more globalized. They believe that globalization of the world’s economy is a good thing that should be encouraged and nurtured for the well being of the global market and economy. The radicals believe that the world economy should be liberalized to allow freedom of the business people to establish their trade, industry and commerce at home or abroad (McBride and Wiseman, 2000; 102). They favor the free exchange of goods, services, technologies between different countries. They are strong opponents of the fact that the world economy is getting globalized each passing day, this should be seen in free trade between various countries, elimination of excessive trade barriers imposed by governments and the globalization of economic activities (World Bank, 2002; 45). The radicals further want to see a global society that is interconnected with the aid of improved information and communication infrastructure. Further, they fight for a borderless society where every person with good intentions has the opportunity to invest and make life worthwhile for the whole society. Accordingly, the radicals are strong fighters of globalization who believe in nurturing it for the well being of both the current and future generations (Mittelman, 2000; 187-8).

The concept that the world economy is becoming more globalized is one that makes little sense to skeptics. Skeptics are individuals who are near pessimists. They do not look at globalization and a feasible process that can deliver any benefit to the world economy (Spybey, 1996; 24). They are skeptical about the improvements that take place in the information and communication industry. Unlike the radicals, skeptics do not argue in support of globalization. They look at the negative aspects of globalization. They will always want to point at issues like international terrorism that have been made easy. The benefits of globalization of the world economy do not appeal to them at all. They do not support globalization and will not argue to support the fact that the world economy is getting more globalized. Interestingly, the skeptics will never argue much against the concept of globalization although their views are generally negative (Sullivan, 2000; 66-9). They doubt globalization and its trends in the current world market.

The pragmatics looks at issues as they are. They are realists who will waste no time to state their observations without subjectivity or biases. In the issue of globalization, pragmatics, like the radicals believe that the world economy is getting more globalized (World Bank, 2002; 45). The improvements in communication and transportation infrastructure and technologies is a fact that pragmatics cannot deny. The economy is getting much globalized at a very unprecedented rate. In various facets of life, globalization almost takes part. Today, there is a lot of e-commerce, e banking, electronic ordering of goods and services and other facilities. All these have made it easy for businesses and economies to operate in a global front. These factors would not have been realized without globalization. Pragmatics will also point out the dangers of a global economy as they are. There are many disadvantages associated with globalization. However, these disadvantages do not make globalization an alien concept. It is a change that has come to the current generation, and it is likely to improve in the generations to come. People continue to invent in the field of communication and information technology (Archibugi, and Michie, 1997; 98). Powerful technologies come to the world market each passing day. There is no method that will be used to curtail the generation of human ideas. This implies that people will always continue to think, generate ideas and make globalization a continuous process. To pragmatics, globalization is not a concept that will go away soon, but one that is in the world to stay. As such, the world economy will continue to get more globalized with the passing of time (Mittelman, 1996; 92).

Internationalization

International trade deals with good, service and payment flows between different countries and policies that regulate these flows and their national wealth effects. It is the trade that deals with the physical goods exchange among many countries and the problems that arise from these transactions (Bauman, 2000; 121-2). There is also the international finance that deals with policies regulating foreign trade markets, the balance of payments and imbalances.

The first step to advance the theory of internationalization of the world economy was put forward by Adam Smith. Smith had certain assumptions highlighted below: the real sector and monetary exchanges are independent of each other; prices are elastic and can be determined under perfect competition; factors of production tend to be mobile internally (within countries), but immobile between countries (Spybey, 1996; 55). He also suggests that the level of technology may be similar within countries but vary among different countries. Moreover, the tastes of consumers are a constant that cannot be affected by international trade. The distribution of income also ought to be constant in such an international market, and there should be no trade barriers (McBride and Wiseman, 2000; 123-4). The major distinction between globalization and internationalization is in the form of technology. Globalization is more about the use of the new communication and communication technologies including the application of information systems. On the other hand, internalization is more focused on the physical trade among different countries.

Internalization of the world economy is also a concept that has been made possible through the advancement in the transportation industry. Such advancements make it possible for people from a different country to gain access to other countries of the world and trade. Again, the radicals fight for freedom and penetration to different countries to physically trade without government restrictions. They are positive about the fact that the global economy is becoming more internationalized. Moreover, they seek to increase this internationalization so that the physical goods and services can move freely between countries. Realists also hold similar sentiments (Nye and Donahue, 2000; 198). They also believe that internationalization is a positive concept that should be nurtured to deliver value to countries and their citizens. Internalization makes it easy for countries to export and import the goods and services they produce. It is a timely concept that may have disadvantages, but whose advantages outweigh the demerits. The advances in the transport industry continue to make internalization feasible, and if the trend continues, the world’s economy will continue to get more internationalized (Sullivan, 2000; 72). The growth in the use of common international languages such as English and information literacy is the ingredients that will continue to make internationalization a reality that the world and its skeptics will have to contend with. Internationalization is not a societal vice, but a tool towards progress that every society that seeks progress must welcome with both hands (Archibugi, and Michie, 1997; 67). It is a concept that has come at the right time and should be guarded and allowed to see many generations to come. Skeptics may not believe in the concept of internalization, being the cynical individuals that they are. However, the realists have proved that this is a phenomenon that will live to see the light of day.

Views on Westernization of the World’s Economy

The issue of the westernization of the world’s economy is very critical and controversial one. Economies are greatly affected by other factors such as cultures, politics and religion. Many aspects of the western culture have spread across the globe making it possible for many to be tempted to think that the world’s economy is soon getting westernized. Some of the traditional cultures that used to be prominent in some continents such as Africa are slowly fading and getting replaced by the western culture (Nye and Donahue, 2000; 117). They disappear and get marginalized. Aspects such as western clothing are taking shape across the globe. In India, the traditional men’s wear is slowly going into extinction. The case is not different in Africa and China. The field of dating, relationships and marriages are not left out either. Western entertainment is also taking shape at a very first rate. People from many parts of the globe listen to the western music and watch their movies. On the other hand, it is worth noting that the western people rarely assimilate these aspects of culture from other regions (McBride and Wiseman, 2000; 166).

The subject of westernization of the world’s economy is, therefore, one that invites discussion from realists, idealists, skeptics and radicals. The realists will always point out to the reality of the matter that most parts of the world tend to assimilate the western way of doing things (Gray, 2010; 29). As such, the economy of the world, to some extent, is getting westernized. They will not hesitate, however, to point out that there are also a number of cultures that remain conservative and will not assimilate the western culture just yet. The skeptics, as usual, are torn between whether to agree that the world’s economy is getting westernized or not (Clark, 1997; 61-3). They are the doubters who still have no stand on whether to support or reject the apparent westernization of the global economy.

The radicals tend to fight for freedom for all economies. They would not support the perceived westernization of the world economies. According to Friedman (2000; 34), radicalism believes in a diversified economy that gives breathing space to all cultures, races, and religion. They would not advocate for the westernization of cultures that throw some traditional ones into oblivion. These discussions are interesting and should be looked at with objectivity. The world’s economy may be getting more westernized, but this westernization has both merits and demerits (Gray, 2010; 41).

Neo-liberalization of the World’s Economy

Neo-liberalization refers to the set of policies in an economy that denotes new economical, political or even religious ideas. It is a concept that has spread and become popular in the last 25 years. The notion that the world is becoming more neo-liberalized has also elicited a lot of debates among scholars who subscribe to different schools of thought. In some countries like the United States, political liberalization is a concept that is used to counter the potential social conflicts. Neo-liberalization is presented to both the working class and the poor as a progressive as opposed to conservative (Griffin, 2006; 59). Economic liberalism, on the other hand, is a different kind of one altogether.

The new school of liberalist economists became popular in Europe during the time of Adam Smith who published a book, “The Wealth of Nations”, Adam and others strongly fought for the abolishment of interventions by governments in economic matters affecting the society (Archibugi, and Michie, 1997; 72). They were opposed to the ideas of restrictions on matters related to commerce, manufacturing. They were also against the idea of imposing tariffs by governments. Adam said that free trade was way out to develop the economies of nations. The ideas were liberal in that they advocated for the abolishment of controls. The application of their ideas encouraged free competition and trade.

In liberalization, it is the market that rules. This implies that there is free enterprise from the government restrictions. It implies great openness to investment and international trade. Neo-liberalization also implies the removal of price controls. The markets are free to impose their own prices without any fear of government restriction. According to Bauman, the proponents of neo-liberalization argue that the unregulated market is the most suitable way of increasing economic growth which will ultimately conduce to the benefit of every member of the society (2000; 78).

Neo liberalization also advocates for the reduction of public expenditure at the expense of social services including healthcare and education. This suggests that there is a reduction of safety nets for the poverty struck and the construction and maintenance of bridges, roads, and water supply (United Nations Conference on Trade and Development, 1997). Moreover, it is characterized by deregulation of everything that may lead to diminishing profits and the protection of the environment.

Another element of neo-liberalization is privatization. It advocates for the sale of the public property and enterprises to the private investors. These private property are rails, roads, banks, electricity, schools, fresh water and hospitals. It also advocates for the elimination of the concept of the community or public good and putting the responsibility in the hands of individuals to find solutions to their own problems. The society is struck by problems ranging from inadequate or poor healthcare, lack of education, and inadequate social security (Nye and Donahue, 2000; 156). The responsibility over these services is then placing directly in the hands of the individual members of the society.

To answer the question as to whether the world is getting more liberalized, I will look at the viewpoints of realists, skeptics and radicals. The pragmatics is usually characterized by a high sense of civil society groups who often take a strong position to fight for the rights of the society. Those who subscribe to the school of thought would therefore, argue in support of a liberalized economy where the interference of the government on the interests of individuals is limited substantially (Clark, 1997; 54; Griffin, 2006; 75). In cases where the government refuses to comply with the need to reduce restrictions, the realists will put pressure on the government to provide quality services to its citizenry.

The skeptics are not usually sure whether neo-liberalism is a societal good or evil. As usual, they are doubters who are not sure about many things. In philosophy, skeptics are not sure about reality; they are not even sure about their own existence (McGrew, et al., 1992; 56). As such, they cannot be sure about whether neo-liberalization is good for the global economy. They cannot be trusted to give the answer as to whether the world’s economy is getting more neo-liberalized.

My Position

Having gone through the different schools of thoughts by the pragmatics, skeptics and radicals about the globalization, westernization, internationalization and neo-liberalization of the world’s economy, I can give an informed view on the subject. With regards to globalization, it is true that the world’s economy is getting more globalized as time progresses. Globalization can be felt in every sector of the world’s economy. The advancements in information and communication technologies and in the transport industry have made globalization possible. Now, more than ever, countries are able to exchange goods and services easily with such advances. Individuals are able to interact and order for goods and services from different countries across the globe. Globalization is at its heights and the world continues to get interconnected, thereby shrinking the world into a village-like economy.

Internationalization, just like globalization is also on the rise. The rate at which physical goods, services and people move from different countries is so high that it is feasible to conclude that the world’s economy is getting more internationalized. This internationalization, like globalization, is a product of the advancement in transportation technologies, which makes the movement of goods and services quite easy.

As for the westernization of the world’s economy, I would play the part of a skeptic. I do not believe entirely that the world will get exclusively westernized. There are aspects of cultures that different communities in different parts of the globe have lived to nurture and getting some of them westernized is not going to be a possible phenomenon. The fact of the matter is that most cultures are increasingly assimilating the western cultures. But I do not believe that the world economy is going to become absolutely westernized.

With regards to neo-liberalization, there are aspects that countries are borrowing, but again, it is not an aspect that will be realized across the globe like globalization. There are governments that have encouraged privatization of the public property. It is also worth noting at this point that most governments still put restrictions, tariffs and trade barriers, thereby making it difficult for neo-liberalization to be a subject of the global nature. Therefore, I can state that there are aspects of neo-liberalism that some countries have adopted and others that have not been adopted.

Conclusion

In conclusion, it is feasible to note that the aspects of globalization, internationalization and westernization are increasing with the passing time. There are also aspects of neo-liberalization that are becoming popular in some economies. The global economy is opening up, and countries are grabbing the opportunity to benefit from the increased interconnectedness and advancements in technology which make this wide economy possible. A global economy is good for the prosperity of different nations and people of the world.

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