Changes in Political Economy of Development - Essay Example

Changes in Political Economy of Development Changes in Political Economy of Development Each country all over the world looks for a working system that will bring out the best out of its resources and also its people. Countries are looking for an advantage that will ensure that it does not only benefit on itself nut also through engaging other countries in a working framework. As a result countries have been looking for the best paradigm for many years with the global changes politically and economically causing a change in each paradigm adopted. In the 20th century there have been many scholars who have done extensive research on the different policies adopted. However, each researcher has been advocating for their own framework and it has been the responsibility of leaders to adopt the best for their countries. Since the dawn of communism and capitalism in the world where the two were seen to be at war with each other there have been massive changes in the systems all over the world. The conventional communism and capitalism have been overtaken by liberalism and eventually neo-liberalism. One can only ask if there are changes that will be seen in future with massive economic and political changes shaping the world. The formation of the European Union is an example and if one goes by the existing trend the 21st century is in for a massive change. The paper looks at the changes in political economy that have been witnessed all over the world in the past seventy years and how they have shaped the world. Capitalism is one of the oldest models that were used at the dawn of the 20th century and its failure was culminated by the great depression that hit the United States massively (Ekiert, 2006). On the other hand, communism was also one of the policies that were used but changes in systems and global trends were pivotal in a paradigm shift (Grant, 2005). The Second World War that ended in 1945 ushered in the dawn of a revolutionary and changed world that was neither purely capitalist nor communist. In the previous years a country was either a communist or capitalist but this changed since other systems started being adopted especially due to the failure of the two systems. The two were based on Marxist and Keynesian theories and who supported the two systems strongly. However, this soon changed and the world saw the dawn of a new era of control and paradigms. It is important to note that the world was under the control of the major economies that adjudicated the systems that were to be used a factor that has not changed to date. One of the major changes that were seen in the capitalism system was the extensive state support and check by the government after 1945. Prior to 1945 the capitalist economy was controlled by the bourgeois who were the owners of capital (Otter, 2014). They set the wage rates and since they owned large investments controlled the decisions of the government in the process. The government had the responsibility of making legislation, and due to imperialism, it was occupied in the war with other countries (Otter, 2014). However, after the Second World War the government was more involved and ensured that it collected taxes and adjudicated the systems that were overseen by the bourgeois. There were minimum wages set and the economy became a huge part of politics. The introduction of the macro-economic policies by the government was also a major contributing factor in the shift (Todaro and Smith, 2015). These changes therefore ensured that the people would benefit more from the policies instituted by the government and the control of the country was not dependent on the bourgeois. Capitalism also gave rise to the western liberal democracy and the Western countries and economies were born. Although these countries had previously been very vibrant and active in the control of others in the world Western Liberal Democracy bore the 1st world countries (Austin, 1995). These were countries from the European and America who had a level of control on their own policies and decisions. Under the liberal democracy the individual was accorded a high level of respect and control over his decisions and methods. The level of control by the government on different aspects of the people was minimal. This is because it was based on a democratic principle and therefore the people had the responsibility to make their own choices. Businesses and policies made by the government did not impeach the level of individualism by the people and as a result apart from taxes and controls for the welfare of the people the government was not involved (Rand et al, 1986). This gave birth to the mixed economy where there is some form of government intervention in the society although minimal to ensure that the society accrues the benefits of their efforts (Chan, 2002). The method was essential in shaping the present economies in the Western cultures where the forces of demand and supply are allowed to operate although there are levels of government intervention. Similarly for the communist countries there was also a change in paradigm shift that was witnessed since the countries adopted a state controlled system. This was a system where the government owned and controlled everything. Communism system was a method that had been existence to ensure a classless society since there was no ownership of anything (Lansford, 2007). The increase in the level of resources in the society meant that this had to change and for countries such as China they adopted the state controlled system. The state controlled system borrowed from Communism and instead of the people owning everything the government did. It still maintained a classless society but could not sustain it for long since there had to be owners of capital if there was to be a working (Toye, 2004). It was commonly referred to as a fixed system since the government worked as the watchdog and controlled all aspects of the society. This therefore meant that the people did not have any democratic choice. Every decision had to pass through the government and in contrast to the Liberal Western democracy where individualism was advocated the system was only adjudicated by the government. In addition, there were the Third World Countries that consisted of African as well as the Latin America countries. These were countries who were still finding their footing in this period and some were still under colonization to their European Masters. This meant that they did not have the ability to make their own economic decisions since the European countries ensured that these countries adopted their own policies. This did not change even after colonization and they were under their cloud in the post colonial period a factor that has continued due to neo-colonialism. Therefore these countries including countries in the South and South East Asia integrated systems that were not due to their suitability and as a result they faced perennial problems in the process (Nkurunziza, 2007). The third world countries have yet to come out of the shadows and the continued relief and donor funds that they receive from their colonialists makes it even harder (Todaro and Smith, 2015). They therefore have no form of identity and cannot make policies based on their own decision-making processes without destroying the structures that were initially set and are followed to date. There was however challenges that developed as a result of the shift in the different systems one of these being a need to expand the industries. The systems gave rise to vast economies that attracted more investors and people to contribute to the development of the industries. However, the industries did not meet the requirements and as a result there was a need for expansion of the industries to suit the level of development. Urban societies were also on the rise and with increased shift from the agricultural societies there was a need to produce agricultural surplus (Harvey, 2005). This was also a major challenge in development since it gave rise to unsustainable economies that could only be met by expansion in the industrial and agricultural sectors. In addition, there was a need to eradicate dualism within the countries and also between countries. This was important in ensuring that countries would be able to do healthy businesses with each other and there was a level of benefits that could be accrued by both sides. These challenges led to the formation of institution that would monitor the world economy and facilitate the growth and development of countries through offering advice in economic indicators. Institutions such as World Bank and IMF were formed and they have been instrumental in uplifting the state of countries all over the world (Shweikart, 2011). The two institutions help countries through statistical analysis and advice and donor funding to boost ailing economies. The two bodies have also been critical in acting as helpful indicators of the economic trends that have been witnessed in the world. They therefore ensure that the world is prepared for any eventual changes and economic downturns that can change the world. The world however changed from these platforms and gave way to new paradigms such as the neo-liberalism. This is most popular method that taking over the world as it advocates for a free market (Shweikart, 2011). The world is heading to this direction and there are countries such as Dubai that have implemented this system and have ended attracting a lot of investors. Other countries are in the first phase where they are implementing this system within the countries in an area and monitoring the results to understand how its changing the economy. The European Union has used this method where member countries do not restrict or charge any extra fees for goods from other countries. The Washington Consensus however is the model that is seen to be changing the world and it looks to make a free trade area while also instituting structures that are supported by international organizations (Burki and Perry, 1998). This is a method that will only continue being implemented in future and the changes will help the world economy to grow further. Conclusion In conclusion, a huge gap still exists between the developed countries and the developing countries. Instituting similar paradigms and economic policies will not be helpful to the developing countries since they do not have similar levels of resources. There is a need to ensure independent a factor that should not be applied only at individual level. However, the world is braced for major transformations due to the changes in the political and economic arena and therefore leaders have a responsibility to get the best out of their economies. The changes have helped the world economy but there is more to be done to ensure the same is felt by individuals all over the world. However, The main question is, What will the next system be? And how will it help the people? References Austin, D., 1995. Liberal democracy in non-western states. 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