Investment and Expansion in International Trade - Essay Example

? In what ways has globalization transformed capitalism? by Both globalization andcapitalism are components inherent with human nature and have existed since the beginning of humankind. These two components are old-aged and have evolved in different ways and stages throughout the centuries. [3] Globalization can be defined a worldwide phenomenon of increased interconnectedness in terms of economy, technology and culture. Since the start of the era of mankind, both capitalism and globalization have been the driving force of each other. In an economy that is globalized, the economies activities are unrestricted in terms of national boundaries and time zones. Globalization basically involves exchange of ideas, labour forces, knowledge, products and services internationally. Globalization exploded in the 1980s with the advances in internet and telecommunication infrastructure which made it easier for people to travel, communicate and do international business. [2] Capitalism refers to an economic structure that allows people to put their private property into use however way they want with little interference from the government. It can also be referred to as a free-market system.[5] Under this free-market structure, people are at liberty to work and undertake jobs of their own choice, buy and sell products from or to whoever they wish or consume a service from a service provider of their own choice. The domination of finance capital over the export of commodities constituted the world’s major features of new age. Therefore, imperialism is a new era that has changed the face of the world and the question that looms today, is globalization a mature form of capitalism that has outgrown its existence in the unified world? Or we are currently at a new stage of development characterized by technological advancement that has opened the door to expansion of capital? [3] Rapid expansion in foreign investment and expansion in international trade has been motivated not only by the progress in technology advancements but also by the developments in socio-politics in the 1980s. There were two major socio-political developments in 1980s and one of this was the fall of global communism. This was fuelled by the fall of the Berlin Wall followed by the dissolution of the Soviet Union that led to freeing of over 400 million people from closed economies. These fall of communism led to a free market and economy hence globalization. This led to countries to stop depending on imports hence formulation of trade and economic policies that aimed at advising that a country can increase its wealth by encouraging local production and few imports. However this failed and most countries resorted to globalization in order to promote capitalism hence welcoming foreign investments and opening their markets. [7] Its capitalism that gave birth to the current modern states and economies. The economics of capitalism was defined by the political structure and its social relations. Therefore globalization in modern day operates in a manner that it is undermining the national state in which it originated from. This therefore brings out the difference between third wave globalization and second wave imperialism. The impact of the speeds and carrying capacity of digital telecommunication networks has led to capital to spread globally. This has changed the whole way in which production of goods is carried out and also how wealth is created. It has also created a new international legal structure, redefined sovereignty and how states control economies and also helped in the restructuring of the labor force and brought the ideologies for international free markets. [6] Globalization and revolution of information has not only affected the movement of capital but also it has affected the ways in which production is carried out and these produced goods are sold. Therefore transnational corporations have responded to the accumulation crisis by setting world market strategies. With the effect of globalization, national markets become saturated and structural limits on wages increases were reached, the revolution of technology allowed capital to escape the national restrictions and build up a global economy. These technology has provided worldwide money transfer hence leading to an explosion of speculative financial markets and new structures that had to be built to facilitate these changes. [8] As industrial technological revolution diverted the finances into the industrial processes away from the land, technological revolution also drove investment away from the manufacturing industry in to the global economy. This led to an interconnected process that was fueled by needs of accumulation that was combined with capabilities of the new technology. The New York Times stated that the most important tool for such an economy is “the computer system that is the heart of global capitalism”. The revolution in information technology also transformed the banking and finance industry. It also deeply affected the global production and manufacturing industry since now any good and services can be produced anywhere due to readily available finances and also labour can be transferred from any part of the word to anywhere where it is needed. Therefore, there is greater flexibility in terms of moving money and also the manufacturing processes. [5] As the new digital economy gained strength, it changed its relation of capital to the state hence creating a new structure based on legal and dominant ideologies. As stated earlier, the second wave imperialism was different with the third wave globalization in that it is tied to the development of its origin state and national sovereignty. Therefore the key aspect of capitalism fueled by the aspect of third wave globalization was the development of the middle class and the aristocracy of labor. The choice for either imperialism or revolution was clearly stated since if exploited would make it possible for the middle class to grow and hence national developments could avoid a civil war. [3] The new capitalist economy is a representation of two major economic sectors i.e. digital and finance economy. The digital economy constitutes telecommunications, media, and computer technology, telephone and cable industries. Corporations in these fields have taken lead in coming up with new ways and producing new tools of production and also the infrastructure. At the rise of imperialism, imperialist countries were focused on conquering the world and making their territorial possessions as part of the national jurisdiction and also closing the international markets, leaving them exclusively for themselves. Therefore due to this monopolization that led to redivision of the world markets hence todays’ ideology of global markets. This led to growth of capitalism as today capitalists just sit in front of a computer and transfer money to any part of the world. [8] Many anti-capitalists argue that globalization is killing citizenship. They argue that globalization has led to an economy with no social existence hence making the state not to have any social responsibility on its citizens. Those with good jobs will enjoy a good and lavish life, live in uptown community, go to excellent schools and enjoy safer community. Therefore globalization is based on one man one dollar vote instead of a one man one vote. The exclusive control of wealth lead to a cross-border economic electorate. This electorate is characterized with controlled economic policies and objectives which undercuts the social and productive investment. [5] The emergence of capitalism fueled by globalization has led to increased legitimacy in the laws and functions that were previously focused on a one state. Initially, many corporations played a main role in the quest to protect their national interests but with globalization and hence capitalism, these interests have been transformed in a structure that suits the new economy. Initially, the sovereignty of these states was centralized but with the emergence of globalization and hence capitalism, these sovereignty has been decentralized in to a legal system and international world trade organizations. [1] With the help of globalization, the world economy has been transformed into a structured web economic relationships. This mainly happened after the World War II that saw old colonies active political freedom from the former territories dominated by imperialism. These old colonies sought to develop their economies to be independent through import substitution. Therefore, the new epoch of globalized economy has been achieved through easy cross-border transfer of money and wealth and also with the regulations that ensured the masses had access to a free market and there was no dominance. This new system was successful because of it being flexible, mobile and faster ways of doing business as compared to the former territorial control that was characterized with the exploitation of people. [2] Conclusion Since industrial revolution, economic globalization has been fundamental in shaping the worlds’ political and economic structure. This redesign was set amid the crisis of accumulation of wealth and stagnation of capitalism. Information technology has provided the tools that are enhancing new forms of domination and new possibilities that are helping in shaping the future. Therefore, through globalization and hence capitalism, advances in information technology provide greater and new possibilities that will enhance greater democracy, provision of knowledge and provision of open markets. Therefore in this context and the discussions held above, it comes out quite clearly that globalization has led to open markets where economies can interact freely hence transformation in capitalism. Bibliography [1] Amin, Samir. "The new capitalist globalization: Problems and perspectives | Links International Journal of Socialist Renewal." Links International Journal of Socialist Renewal | International Journal of Socialist Renewal. Web. 13 Dec. 2013. [2] Cornford, Tony, and Diego D. Navarra. "Technology, globalization, and governance: Research perspectives and prospects." (2008): Print. [3] HAY, COLIN. "Contemporary capitalism, globalization, regionalization and the persistence of national variation." Review of International Studies 26.4 (2000): 509-531. Print. [4] Maitra, Priyatosh. "Globalization of capitalism, agriculture and the negation of nation states." International Journal of Social Economics 24.1/2 (1997): 237-254. Print. [5] McLaren, Peter, and Ramin Farahmandpur. "The Globalization of Capitalism and the New Imperialism: Notes Towards a Revolutionary Critical Pedagogy." Review of Education, Pedagogy, and Cultural Studies 23.3 (2001): 271-315. Print. [6] Murphy, Robert P. "Capitalism and Globalization." Discover the Networks. The Politically Incorrect Guide to Capitalism, 2007. Web. 13 Dec. 2013. [7] Slaughter, Sheila, and Larry L. Leslie. Academic Capitalism: Politics, Policies, and the Entrepreneurial University. Baltimore, Baltimore: Johns Hopkins University Press, 1997. Print. [8] Wilkinson, Will. "The Dissident: Politics and Culture From New Perspectives." The Dissident: Politics and Culture From New Perspectives. University of Maryland, College Park. Web. 13 Dec. 2013. Read More