International Relations and the Global Economy - Essay Example

INTERNATIONAL RELATIONS AND THE GLOBAL ECONOMY By Name Course Instructor Institution City/State Date “The primary reason that nearly 1 billion people have been taken out of extreme poverty in the past 20 years has been capitalism and free trade.” Introduction The accomplishment of the world in reducing poverty is roughly, by any measure, remarkable. Even though scores of the new Millennium Development Goals (MDGs) like reducing maternal death by 75 percent as well as child death by 67 percent will not be achieved, the goal of reducing global poverty by 50% between 1990 and 2015 was realized in 2010 (The Economist, 2013). Basically, the MDGs could have aided slightly, by generating a benchmark for progress measurement, as well as by concentrating minds on poverty iniquity. However, nearly all of the acknowledgments have to go to capitalism and free trade, given that they have facilitate economies to develop, and this growth, has above all, alleviated poverty (Perry, 2013). Countries at the moment understand means of reducing poverty such as through targeted policies like basic cash-transfer schemes as well as social safety nets. Nevertheless, the principal measure of poverty-reduction is liberalizing all markets to allow poor person become richer (The Economist, 2013). That connotes freeing trade between nations as well as within them. The essay seeks to critically evaluate the claim that ‘the primary reason that nearly 1 billion people have been taken out of extreme poverty in the past 20 years has been capitalism and free trade’. Discussion This claim is relatively not true considering that capitalism has failed to end poverty in countries like India or China, which have simply been largely substituted by a agrarian class exploitation system with slavery on wage. The similar process occurred in 18th century in Britain at the time of the Industrial Revolution, and this was not a charitable act. According to (Socialist Studies, 2013), Feudal economy exploitation was substituted by capitalist economy exploitation, and poverty in this case is not a natural condition of the human state. Arguably, poverty is actually brought about by commodity production and capitalism as well as exchange for earnings. Capitalism debars from the market that cannot pay for commodities as well as by means of the wages system, Shah (2006) posits that capitalism imposes a system for rationing onto the working class in order that what they may purchase with their salaries and wages as well as what they together with their families require so as to live decently and resourceful lives are two distinct things in general. Poverty subsistence starts by the working class being barred from the rights of distribution and production means. By being barred from what they require to continue living a meaningful life, employees are compelled to trade their capability of working to the company in return for a salary or wage. Economists posit that during the process of production the employees make products that have superior value as compared to, the machinery, the raw materials as well as the worker effort that that generated these products. Marx identified the extra value that working class generate as, surplus value and is the undeserved income source of profit, interest and rent that benefits the capitalist class (Marsden, 2003, p.118). In owning the distribution and production means to the segregation of most of the people the rich are less concerned about poverty; rather, they live indescribable life of privilege, luxury and wealth. The world’s most rich persons making one percent of the total population, are at the moment controlling almost 40 percent of the world's wealth, and this share is increasing yearly (Frank, 2013). For instance, according to the Boston Consulting Group's Global Wealth report the total private wealth in the world increased to $135 trillion. The richest control almost $52.8 trillion, while those worth above $5 million control almost 25% of world's wealth (Frank, 2013). Ironically, almost 50% of the total world’s population that is over 3 billion people are surviving with less than $2.50 per day. Besides that, over 1.3 billion people are in extreme poverty (surviving with below $1.25 each day). According to UNICEF, almost 2.1 billion children across the globe, particularly in Africa are living in extreme poverty, and more than 22,000 children lose their life daily caused by poverty. Moreover, over 1 billion persons cannot access clean drinking water, and 870 million persons globally lack enough food to eat (Socialist Studies, 2013). Twenty five percent of people worldwide (almost 1.6 billion) lack access to electricity and 80% of people worldwide live with less than $10 a day. Capitalism emergency symbolises a culture, which in scores of ways has successfully been deployed with regard to accommodating lots of individuals in absolute luxury as well as comfort. However, it has failed to be successful in integrating everyone in equal measure, and this failure remains being one of its key setbacks. Capitalism has resolved the issues of feeding lots of person (even though not for everyone) and it has also offered unique developments in medicine and health (but, once more, not for everyone) (Shah, 2006). Besides that, capitalism has facilitated the development of remarkably multifaceted technological tools and promoted a worldwide communication level exclusive of guide. A form of international trading as well as globalization where all countries flourish and grow justly and even-handedly is most likely what the majority of people desire to see (Shah, 2006). The modern world economic system is being viewed as globalization or free trade with a number describing the historical occasions resulting into modern international free trade as well as the current system as inevitable. Modern economic system of the world is an outcome of such processes, and power has at all times been a factor. Capitalism has succeeded in promoting initiative and technological innovation, as well as in generating wealth (and ironically in increasing poverty) (McKie & Munshi, 2007, p.23). Scores of economists concur that capitalism generally may be an influential development driver, but, certain forms of capitalism and political interests have distinct outcomes. For example, the domination of capitalism during the colonial period was exceedingly disparaging. Similarly, critique concerning the present paradigm of corporate-led neoliberalism as well as its capitalism version that has surfaced has been increasing. Such critiques emanate from scores of areas such as non-governmental organisations, governments of developing countries as well as average citizens (Shah, 2006). Elimination of poverty is simple: The impoverishment of the developing world is understandable once one learns how “plunder by trade” locks the world into violence and war. Poverty reduction is not philosophically complex and can be achieved not through free trade or capitalism, but through eliminating monopolisation of finance capital, technology and land, as well as equalising pay for work that has equally been produced, both between trading countries and in internal economies. After every country and person has accessed technology and workers receive pay worth their labour power, then labour purchasing power in different countries, and inside countries, will even out (Brady, 2009, p.125). Reducing monopolies will right away lead to even distribution of wealth share amongst all society members even as efficiency in the economy increases and generates more wealth. This can be acknowledged as more democratic and cooperative capitalism that will guarantee equal rights to every citizen. The international economy is structured in a way that it benefits the core, rather than the periphery. The global economy as per Socialist Studies (2013) is structured in a way that it cannot offer enough capital to nations that require it the most and meet the criteria for it. Financial markets across the globe suck the majority of the world’s savings to the core (centre), but become unsuccessful to drive the money back to the periphery. Certainly, ever since 1997, capital has been flowing reverse from poor countries at the periphery to those rich at the core. Practically, global financial markets have certainly not been left to their own apparatus since wealthy countries, are in command. Their main mission has been to protect their individual interests; for instance, when such countries have problems, their system intervenes aggressively. Poor nations that are unable to borrow in global markets using their own currency have no authority, and so they have to ask the International Monetary Fund (IMF) for help (Socialist Studies, 2013). The fund offered by IMF for poverty stricken countries is more based on global economic stability instead of helping the poor nations pursue the countercyclical economic policies required for keeping away from recession. Most developed countries continue becoming richer by selling cheap capital-intensive commodities expensively and purchasing labour-intensive commodities cheaply. This trade imbalance continues increasing the gap between rich and poor considering that the products sold by the wealthy are for consumption and not for producing. Conclusion In conclusion, it has been argued that no economic system (either free trade or capitalism) can do away with poverty as well as socio-economic inequity. People are in nature different and varied from one another, and so regardless of which political or economic system they reside in, a number of persons will be better at a certain system as compared to others. Certainly, capitalism can bring about economic development but cannot succeed in eradicating poverty, maybe reduce. Furthermore, capitalism and free trade heightens economic inequality and the higher the economic inequality in a country poverty increases. The most effective system for making certain success is a free market considering that economic growth and prosperity are the best means of reducing poverty, and so free market capitalism is purported as the best economic system for reducing poverty. References Brady, D., 2009. Rich Democracies, Poor People : How Politics Explain Poverty: How Politics Explain Poverty. Oxford : Oxford University Press. Frank, R., 2013. Top 1% Control 39% of World's Wealth. [Online] Available at: http://www.cnbc.com/id/100780163 [Accessed 23 October 2014]. Marsden, R., 2003. Nature of Capital: Marx After Foucault. New York: Routledge. McKie, D. & Munshi, D., 2007. Reconfiguring Public Relations: Ecology, Equity and Enterprise. New York: Routledge. Perry, M.J., 2013. Take a bow, capitalism — nearly 1 billion people have been taken out of extreme poverty in 20 years, thanks to markets. [Online] Available at: http://www.aei-ideas.org/2013/06/take-a-bow-capitalism-nearly-1-billion-people-have-been-taken-out-of-extreme-poverty-in-20-years-thanks-to-markets/ [Accessed 23 October 2014]. Shah, A., 2006. Criticisms of Current Forms of Free Trade. [Online] Available at: http://www.globalissues.org/article/40/criticisms-of-current-forms-of-free-trade [Accessed 21 October 2014]. Socialist Studies, 2013. Is Capitalism Ending poverty?. [Online] Available at: http://www.socialiststudies.org.uk/article%20poverty.shtml [Accessed 23 October 2014]. The Economist, 2013. Towards the end of poverty. [Online] Available at: http://www.economist.com/news/leaders/21578665-nearly-1-billion-people-have-been-taken-out-extreme-poverty-20-years-world-should-aim [Accessed 23 October 2014]. Read More