International Economic Law Justice and Development - Thesis Example

Post-Development Issues Arising from the Barriers Inherent in the Market Society Faculty al Affiliation Introduction This thesis seeks to examine the possibilities that the attainment of substantial post-development in future requires coming to terms with issues inherent in the market society model that remains dominant in all market ideologies. This means that, although the development agenda has long been characterized by the domination of developed nations such as United States, Europe, and Japan that established agendas, the development agenda by emerging markets must acknowledge inherent issues from the market society. This means that, despite efforts to dissociate post-development from market society ideologies, emerging market still have to succumb to inherent problems that are imposed by the developed world. However, the prevalence of imposed ideologies from the developed nations through the provision of economic ideas and resources does not completely manage to ignore emerging markets1. The emerging markets are characterized by a momentum that is making them relevant players in the global market. The most prominent emerging markets are China, Brazil, India, and South Africa. Nancy and Francis2 support that with an almost equal force, the emerging economies both providers and recipients of development resources and the best ways of consuming those resources. This reversal of situations proves the fact that while these economies inherit market society concepts, development is not just bestowed by those in power on their followers, but is something that those without any power achieve on their own. However, it is crucial to understand that developed nations through their market society concepts greatly impact the developing nations and to some extent control them. For instance, during the Great Depression in the United States, the implications were devastating for both the United States and the world at large3. The immediate outcome placed the entire world into a global depression affecting both politics and the economy. However, for some developing nations back then, the global depression presented an opportunity for a shift away from severe monetarism and laissez-faire policies, and the embracing of Keynesian demand management4. For these nations, this opportunity meant delegitimization of the capitalist system that was market-oriented, thus paving the way for the upsurge of anti-liberal and radical movements throughout the globe. Fortunately, the rejection of capitalism involved no violence both in the developing and the developed world. Dietmar5 also states that during the Great Depression of 1929-1939 that led the world into a state of global financial panic, capitalism neared complete elimination in nations such as China and Russia. However, these nations declared their unwillingness to abandon capitalism or market society approach and any foreign and domestic investor was expected to adhere to these stands. Clearly, these developing nations realized that it was not them, but the developed western democracies that were in worry of too much capitalism for their overdependence on a globalization scheme led by the market society, and that demanded for advanced global finance regulation6. Post-Development in the Wake of Global Financial Crisis of 2008 Compared to their reaction after the Great Depression, developing nations exhibited a much less vigilant reaction as they squarely blamed the US’ market society development model for the situation7. Like the Brazilian President Luiz Inacio, most leaders in developing nations believed that the 2008 financial crisis was as a result of “white people with blue eyes.” Additionally, the Keynesian capitalist nations such as China and Russia understood that it was the Neoliberal and the free-market models of development that were put into much difficulties given their emphasis on low taxes, private ownership, small state, and deregulation. This was because years before the crisis, capitalist nations distanced themselves from the neoliberal or free-market or market society development model8. For instance nations in East Asia and Latin America discredited what had been referred to as the Washington consensus that involved forming an alloyed alliance on foreign capital. In their reaction, most of the emerging markets shied away from the neoliberal development market by accumulating reserves with huge foreign currency while upholding regulatory control for their banking systems9. For these markets, this strategy paved way for insulation from global economic volatility. In addition, the recent crisis’ implications included impressive rebounds where the emerging markets went on to demonstrate even better economic growth numbers compared to their counterparts in the western democracies10.With their proactive approach to the discrediting of uniform view of development by monetarists and their market society perspective, the emerging markets saw the 2008 to 2009 crisis as a reflection process on the impact of such prescriptive ideologies as advocated for in the Washington Consensus. Given this approach by the emerging markets, the post development in relation to the 2008-2009 global financial crisis signals the overthrowing of the Western-based certainties such as promotion of a market society that had for long been emphasized as the only explanation and governing of the globe11. However, Lopes highlights that it was through the divergent approach of the emerging markets that the 2008 global financial crisis exposed the developed nations’ centrism. However, a report from United Nations12 in indicated that the global economic crisis led to the decline in annual growth rate from about 4% two years before to 1.6% in 2008. In addition, the growth rate declined further in 2009 to about -2% and this caused 99% of the world economies to experience a severe decline in their average per capita13. For the developing nations, the greatest blow included severe decline in the prices of commodities in a period of 18 months prior to the crisis while the economy of North America subsided by a double downward spiral. Unlike other world nations, China was an exception as it did not suffer any capital reversals and neither did its extensive stocks reserves of foreign exchange decline. China’s exception from the 2008 financial crisis was also largely due to its strong enough economy that served as an alternative to East Asia nations that were still reluctant to associate with International Monetary Fund(IMF). The World Bank Group14 report indicates that back then, China’s financial reserves were about $95 billion. In its state, China was not vulnerable to contracted economies, or fading trade. On the contrary, the country had undying trade finance, unprotectionist responses to economic stability, and the external demand for its credit broadened. China, unlike the developed economies, used an approach that did not support much of double movement as it was ready to free itself from the social market concept engrained in the market society era. With the investment from the nations in East Asia, the nations experienced increased investments, employment, and consumer spending thus reinforcing its economy even further. Kim15 findings indicated that unlike China, advanced economies till today experience financial disruptions that were caused by the bursting of housing bubbles whose implications quickly and severely spread to the real economy of the US while spilling over even to emerging markets despite their lack of awareness of preparedness. In addition, nations such as US and European nations still falter with anemic growth coupled with unemployment that cuts across the Atlantic with unconventional measures that still remain unconventional and ineffective16. Today, while China prides itself in being among the large economies, most of the advanced nations experience soared sovereign debts of over 100% the gross domestic product (GDP). Furthermore, there is little to indication that the situation will better with time as the fiscal crisis invaded the EU area in 2010 and is currently threatening the US public debt that is almost nearing the debt ceiling. Market Society with Reference to Polanyi’s Great Transformation The explanation of the nature of the market society today borrows heavily from theories and concepts propagated by ancient theorists such a Polanyi, Marx Weber, and Amartya Sen among others. These theorists provide useful insights in the explanation of the events that led to the two global resources and those responsible for such financial crisis. Castles et al17 reveal that the key cause of market society as the mindful actions of a state coupled with its interests in business and a self-adjusting market system. These reference compares to the modern day US’s pursuit of a neo-liberal market society prior to the 2008 economic crisis, and the exception of China a Keynesian capitalist model, led to the economic downtime in about 99% of the world nations. According Castles et al, such a market society or the free-market development model as the one held by the United States must be replaced with a market or society that pursues democratic control of economic and political arenas18. Through this argument, Polanyi seeks to distinguish between embedded and disembedded economy. Through their disembeddedness, nations seek to encourage transactions and social interactions that are not in any way flooded in social associations for any social society. On the contrary, disembedded economies are founded on financial self-interest19 that discourage the notion of social society and free labor movement. Furthermore, disembeddedness refers to the aspect of no social control over the monetary course of distribution and production. In his critic of market economy, Polanyi dislikes the fact that non-economic institutions can be so powerful as to constrain economic activity in a nation. Additionally, Polanyi argues that market economies operate under rationalization through political, religious or kinship institutions. Consequently, the rational self-interest of market societies contributes to their motivation to act to the interest of themselves, their religion, society, or clan at the expense of others. Market Society Drives Economists Fallacy Through the rational self-interest of embedded societies, Polanyi uses the economic fallacy to refer to the assumption by neo-liberal pursuant that all societies founded on division of labor are based on implicit or explicit market with individual actions that are exchange oriented and that require appropriate modeling.20 Economist’s fallacy, according to Polanyi, is founded on materialistic conception of history given its oversight that an economic society is only present in a society ruled through capitalism. The pursuit of materials and commodities were established by the desire to gain and the fear of lack that today form the universal motives of humans. According to Polanyi, the immediate consequence is the disappearance of economic determinism as societies realize they have needs and seek for any possible ways to meet their needs, thus explaining the cause of social processes as they are21. In the embedded market, the social classes are similar to supply and demand for land, labor, and capital, yet every institution within this society must obey the market needs. Some of these institutions include the family, religion of art, and the organization of education and science. As for man within the materialistic society, the popular believe that man was only created for material hunger and gain, is economical, and is rational. Otherwise, men acting for honor and power, and are considered ideal they are not only immoral, but also dead.22 The view of man as an economic animal is prevalent in a market-oriented system that seeks no social relations but their own self interests. In order to understand market systems, the substantive and formal economic meanings are crucial. With formal economic definition, the main consideration of the relationship of means to end while substantive economic definition focuses on man’s elemental fact that man must live within a physical environment that then sustains him23. In the market based economies, material means that man depends on nature for his livelihood subject to the social relations context and consequently, man remains dependent for as long as they live and fulfill their material objects. Contemporary Re-Working of Polanyi against New Economic Foundation Polanyi24 reveals that today, the market economy is an entirely new institutional mechanism of the western society. Polanyi’s transformation of the system is analogous to the metamorphosis of a caterpillar unlike the alterations that are expressed in the form of ongoing growth and development.25 This analogy represents a form of wholeness and interconnectedness of the social, political, and economic elements of the market transformation. However, Polanyi explains that during this market transformation, nothing was natural about it since everything was planned to work within the rational reasoning. Consequently, Polanyi reveals that the final market transformation is characterized by laissez-faire and not due to natural evolution, but rather the continuous intervention that is centrally controlled and organized.26 Laissez faire on one side encouraged the development of a market society combined with efforts of numerous society groups to expand the impact and scope of their self-regulating markets27. In his interpretation of modern social and economic history, Polanyi agreed with Robert Owen that it was capitalism that led to the impoverishment of a worker, coupled with the interference of ethical culture where the workers belonged and that they used to define their identity. Contrary to this notion, Polanyi advocated for a society where the social worker had the rights to define their lives through mutual cooperation and respect. Unlike Karl Marx, Karl Polanyi focuses on the dehumanizing cultural outcomes of the neo-liberal or free market system. This free-market system pre-dominated an unregulated market that removed people from the socio-cultural framework that included the combination of their human existence. Unlike the modern market, the economic activity was embedded in social relations that constructed the society as one. With the self-regulating market, the novel and startling elements is that this market disembedded the economy from its social base, established cultural estrangement among owners and workers, while leaving the natural environment and the society unprotected. According to Baum28, the current transformation of land and labor into commodities introduced industrial capitalism where labor and land were not just sold, but also bought, were used and also destroyed, and like simple merchandise, they were in no sense the products of human industry but fictitious. Post-Development Dependence on Human rights and Human Development The transformation of land and labor into commodities does not only affect human rights, but also human development, thus their common goal and vision of acquiring freedom, dignity, and well-being of all persons29. Baum reveals that the most affected human freedoms are freedom to develop and realize one’s potential, freedom from discrimination, freedom from fear, and freedom from any form of violation or injustice. In addition, humans expect to be provided with freedom to engage in decent work. During and before the Great Depression, more than half the world lived under colonial rule. Back then it was easy for the western democracies to impose their ideas on the developing nations and therefore there was nothing natural about this transformation that led to the rise of market economy30. As a result, the implications of the great depression not only affected America but also the world at large. In addition, very few countries gave their citizens the rights to vote, thus preventing any form of democratic regimes. Back then, the desire to expand the market-oriented form of development led to little or no progress in the identification and elimination of discrimination by nationality, religion, race, and gender. Consequently, more than half of the world’s population was subject to western ideologies. However, with the 1948’s universal declaration of human rights, 140 world nations have today ratified the six critical conventions and standards on political, civil, cultural, social, and economic rights31. With the end of colonization and the beginning of a new era of promoting fundamental rights, both rich and poor nation have made great advancements in demonstrating the dynamism of human rights initiatives like is the case with South Africa after apartheid. South Africa is a great scenario that presents human right pursuance as the core strategy for its post-apartheid development. Today, the world’s most optimistic human rights structures are present in South Africa. Additionally, India is the world’s largest democracy driven by the Supreme Court’s decision that the each person must be granted the rights to education, health care, and free education32. Besides hosting most several of the world’s most developed nations, Europe is also a step ahead in ensuring that each person is subjected to human rights as a priority as defined under the Council of Europe, and the European Court of Human Rights. Despite such moves to protect human rights, the most world nations are characterized by struggles with discrimination, oppression, and injustice. Nonetheless, the world must seek to embrace that human rights are crucial for full attainment of human development, as evident in most nations today given the absence of colonization. According to Sen33, the focus on human freedoms contradicts with the constrained view of development, especially where development is identified with industrialization, advancement in technology, gross national product (GNP), or individual income growth, and with modernization of the social aspect. In the expansion of the freedoms, both GNP and personal income growth are very crucial and facilitate the enjoyment of those freedoms by each member of the society. Other determinants of freedoms are economic and social arrangements such as health and education, and civil and political rights such as freedom to engage in public discussion. Sen34 agrees that freedom is only attainable upon the removal of the any cause of no freedom such as poverty and tyranny, abandonment of public facilities, poor economic opportunities, and over-activity of repressive states. Notwithstanding unprecedented rise in complete opulence, the world today shies away from elementary freedom to many people or the majority. At times, absence of substantive freedom relates directly to financial poverty that repudiates people of the liberty to gratify their hunger, or attain adequate nutrition or prescription for diseases treatment. In addition, Sen35 reveals that through poverty, humans do not satisfactorily cloth, shelter, use sanitary facilities, or access clean water. In other forms of unfreedom or freedom violation, the consequence is direct denial of political and civil liberties by authoritarian regimes and from forced limits of freedom to involve in the political, social, and economic community life. The two main reasons making freedom the fundamental element in the development process is the effectiveness reason, and evaluative reason36. The evaluative reason that makes freedom crucial for development involves progress assessment that involves determination of whether the people’s freedom is enhanced, and whether development attainment depends on the people’s free agency. In both forms of reason, the people’s achievement is dependent on political freedoms, economic opportunities, and social powers as well as other permitting situations of basic education, quality health, and reassurance and refinement of incentives. However, the freedoms granted to the people through their liberty to involve in social decisions, and public decision making influences institutional arrangements for any opportunities and these demonstrates interconnectedness. According to Maboloc37 this approach by Sen is viewed as using the concept of capability to compare with regards to the quality of life aimed at advancing the concept that seeks to understand what people can do or are able to do unlike the level of satisfaction they experience nor the quantity of resources they can command for a better understanding of human life quality. Contrary to Nussbaum,38 Sen used the capability approach that went beyond mere comparative use of capacity space to coherently provide an account of the manner in which capabilities, coupled with threshold level idea, offer a foundation for constitutional principles that citizens can use to demand, from their government, their rights. However, Nussbaum and Sen39 agree that the achievement of well-being for each and every person is crucial in providing some form of equality in terms of capability. In this approach, Nussbaum uses an approach that introduces the concept of human flourishing and human dignity subject to Aristotle and Marx. Furthermore, the two agree that aggregate income idea is insufficient for the assessment of human well-being. However, Nussbaum reveals that the use of Capability Approach serves as the basis for detailed political beginnings and overlapping agreement. In order to substantiate her Capability Approach, Nussbaum’s intentions is to make governments seek to implement it as the solution to the problems facing them and to use the capability approach framework to assist in the construction of basic political principles that serve as the basis for constitutional guarantees to which governments must be held accountable for their actions by their citizens40. States’ accountability to their citizens is an indication of adhering to global ethics that entails moral reasoning across borders such as race, geographical location, class, ethnicity, culture, gender, religion, environment, and historical experience41. In order to address cross-border moral disagreement, and conflicts, Nussbaum provides two philosophical approaches where the dominant one seeks to build moral theories not dedicated to one metaphysical world-view or spiritual foundation, but like-minded with numerous standpoints. This approach defines a theory that is both thick and thin. Thick in that it robustly perceives the good embedded within specified context and that highly regards community traditions. Conversely, thin approach to cross-border moral disagreement and conflict uses the approach that holds all universal norms including human rights theorists perceived as responsible for the construction of ‘thin’ theories of morality. The global caption of thin theories is that they have little or no use establishes theories that are universally shared therefore risking cultural imperialism. This approach, Nussbaum uses to justify that the Capability Approach is universal but of a given type that accommodates pluralism while avoiding criticism applied to other communitarians, and Universalists. Role of Justice in Facilitating Post-Development In their pursuit of equality, Sen and Nussbaum disregard bourgeoisie’s capitalist society by disregarding it as completely unequal in a socially just society42. Through this argument, Sen and Nussbaum pursue an idea founded on Marxist ideology that both the money people make and the property they own have no means of rightfully belonging to those who make or owned them. In his own capacity, Marx critiqued capitalism’s private property on the basis that it is evil since the rich use private property concept to repress the poor. Through The Communist Manifesto43, Marx’s perception of money as a collective product that can be owned by anyone proves that the making of money is, hence the result of all collective action of the community or society members. Through his perception, Marx believes that even though the rich had lots of wealth, it was due to the efforts of the poor as well and this made them equally worth of getting their fair share of money from the proceeds, unlike where the rich keep most of the money for themselves. Consequently, the rich then use this money to purchase private property selfishly, such as land, factories, and houses among others. This form of market is called a capitalism system where social justice is only intended at providing a remedy to workers’ exploitation by capitalists. Additionally, the only solution to the accomplishment of social justice in a capitalist market is through wealth redistribution done by seizing the wealth of the greedy rich and distracting it to the poor with the agent of redistribution being the government. Based on Jessop and Wheatley’s findings, Marx approached social justice in the form of circulation in production, and the commodities exchanged as a proportion of their value, and both to some extent advocated for communism. Prior to the advocacy and adoption of communism, most countries in Europe and Asia were hardly promising democratization candidates from a modernization perspective, and most of them were poor. Additionally, such nations had unevenly distributed development from fairly urbanized, affluent, and educated society in Czech to illiterate, poorer, and overwhelmingly rural areas in central Asia. However, with time, communist planners managed to unknowingly pave way for the end of communism and subsequent democratization through their embracing of illiteracy eradication and increased education enrollments. Furthermore, through industrialization and massive collectivization campaigns, communist nations managed to experience urbanization levels that exceeded those of nations with in the East of Europe, while nearly catching up with those of nations in Latin America44. Clearly, the former soviet bloc got into a post-cold war era with crucial advantages of education and economic equality required to facilitate democratization through advanced political involvement, and civil society participation. However, instead of introducing urbanization, modernization in the soviet bloc only weakened democratic prospect from the perspective of modernization theory. Based on Escobar’s approach, one could argue that during their development, nations in Eurasian bloc safeguarded their new discourse from any attempt to have dominant forces salvage their development and displace certain classifications of modernity.45 These nations did not give in to the fashionable notions presented by western democracies such as sustainable development, women and development, and market-oriented development. On the contrary, they relied on their social awareness and amplified it to avoid drifting away from their development agendas. Based on the current economic situation of nations such as China and Russia, Escobar’s46 argument of visualizing the possible paths to use for one’s development strategy is crucial creating a social awareness that keeps one on the right path to development unlike postponing it. In order, to attain such development, Jessop and Wheately47 argue that the definition of labor as seeking to use capacity to run the development strategy should involve purchase of labor by the capitalist such that the worker receives the right quantity of value for their labor power. Conclusion The paper elaborates post development from the perspectives of the world’s famous financial crisis and incorporates theories and study findings from credible researchers and theories such as Polanyi, Escobar, and Karl Marx and Amartya Sen. From the Polanyi’s perspectives, states actions are to blame for the consequences associated with them. For instance, the 2008 financial crisis in the world was due to the self-centered decisions of the U.S. yet affected most world nations except China that sought to keep off from foreign debts. China’s decision put it at an upper hand and today is one of the fastest growing economies. In their argument against the neo-liberal development model, Sen and Nussbaum argue that human flourishing and dignity require equality in terms of capacity and this means observing human rights and freedoms to facilitate the achievement of the well-being of the society. This, Marx and Aristotle, referred to as the concept of truly human functioning, unlike free-market functioning, where human is denied freedoms to choose and make decisions about their lives. Bibliography Baum, G. Karl Polanyi on ethics and economics(McGill-Queens University Press 1996). Birdsall N, Francis F, “The Post-Washington Consensus: Development after the Crisis.” Foreign Affairs (2011) 45-53. Castles, Stephen, Magdalena Cubas, Chulhyo Kim, Elsa Koleth, Derya Ozkul, and Rebecca Williamson, “Karl Polanyi’s Great Transformation as a Framework for understanding Neo-Liberal Globalization.” Social Transformation and Interntional Migration in the 21st Century: Working Paper 1(University of Sydney 2011) 1-19. Dale G, Karl Polanyi: The Limits of the Market(Polity Press 2010). Drucker P, The End of Economic Man: The Origins of Totalitarianism(Transaction Publishers 2011) Escobar A, “Imagining Post-Development Era? Critical Thought, Developmetn and Social Movement.” Third World and Post-Colonial Issues(1992) 20-56. The World Bank Group, A Special Report of the Commission on Growth and Development on the Implications of the 2008 Financial Crisis(2013). Jessop B, Russell W, Karl Marxs Social and Political Thought, Volume 8(Taylor & Francis 1999). Kim J, “Global Policy Challenges in the Post-Crisis Period.” Asia Economic Policy Conference, Asia Economic Policy Conference( 2011) 353-359. Lopes C, “Economic Growth And Inequality: The New Post-Washington Consensus.” RCCS Annual Review(2012) 1-17. Maboloc C, The Concept Human Development: A Comparitive Study of Amartya Sen And Martha Nussbaum(Lnkopings Universitet 2008). Nussbaum M, “Human Functioning and Social Justice: In Defence of Aristotelian Essentialism.” Political theory(1992) 202-246. Polanyi K, The Great Transformation: The Political and Economic Origins of Our Time( Beacon Press 2001). Rauchway E, The Great Depression and the New Deal: A Very Short Introduction(Oxford University Press 2008). Rothermund D, The Global Impact of the Great Depression 1929-1939(Taylor & Francis 2002). Sen A, Development as Freedom(Anchor 2000). United Nations, The Global Social Crisis: Report on the World Social Situation 2011(United Nations 2011). Read More