A Great Threat In Todays Global Political Economy - Coursework Example

POVERTY: A GREAT THREAT IN TODAY’S GLOBAL POLITICAL ECONOMY by of the of the Introduction On August 16, 2012, the conflict between South African mine workers in Johannesburg and the owners, Lonmin. Inc.’s stockholders, based in the UK took an ugly turn when police forcefully tried to oppress the strike. The South African police fired real bullets on the strikers. In the conflict, 35 miners were killed and many were severely injured (Piketty 2013, p. 39). Similar to most of the labour strikes, the basic purpose of strike was related with miners growing demand over increasing their wages from 450 to 900 Euros per month. After the widespread criticism and political stir over tragic life losses in the conflict, the mine company eventually proposed an increment of 75 Euros per month in the salaries of workers (Piketty 2013, p. 39). The tragic incident raised the question whether it is really necessary to wait until things get into hot water rather than tackling such issues right before their emergence by implementing fair share-percentage of output between workers’ wages and company profit? The answer consists of various profound aspects whose roots can be traced in the current global political system, i.e., capitalism (Hutton 2014). The social inequality is present in the world since many centuries. In the past century, the most common cause of revolt was the clashes of interests between peasants and landlords, between landlords and those who cultivated in their lands as their labours, those who provided land rents and those who received them. But, after the era of Industrial Revolution, a new conflict group, i.e., labour and company owners, emerged mainly due to the fact that global political economy rapidly adopted capitalism and production became more profit-oriented, exploiting labour and natural resources even more aggressively than in the past (Hutton 2014). The global political system of capitalism has dramatically worsened the economic inequality in the society, triggering high rates of poverty all over the world. Poverty possesses a serious threat to the global security and stable political economy in the world. By means of various researches and available data and findings, the paper will emphasize on the greatest issue in today’s political economy, i.e., poverty and will present direct and indirect links between the current global capitalism system and growing inequality and poverty in today’s society. Poverty and Inequality: Facts and Statistics Despite the fact that financial treasure in the world has steadily risen since the early 1950s, the majority of wealth has unevenly concentrated among the small portion of the overall population in the world. This has caused a trend of over 25 years of social and economic polarization in combination with aggressive capitalistic state policies, stimulating high rates of poverty and inequality worldwide (DeRegil 2001, p. 1-2). According to the 2013 reports of the Global Issues, the World Bank and the United Nations, today, over 80% of total worldwide population lives on less than $9.90 per day. Over 85% of the global population lives in countries where financial inequality is continuously widening (Shah 2013). The richest 19% of global population constitutes more than 75% of global wealth. According to the 2013 report of United Nations International Children’s Emergency Fund (UNICEF), around 22500 children in all over the world die every day due to poverty; in 2013, almost 1 billion children were under poverty which is 50% of global population of children (Shah 2013). If present trend continues, the Millennium Development Targets of the United Nations to reduce the number of malnutrition children by 50% will miss the objective by 32 million children, especially due to high rates of poverty and inequality in Sub-Saharan Africa and Southern Asia. Due to extreme poverty in many parts of Asia, Africa, and Latin America, it is estimated that 75 million children miss education and basic welfare facilities (Shah 2013). Furthermore, the reports of Global Issues stated that the GDP (Gross Domestic Product) of 42 highly indebted poor states was less than the combined wealth of the world’s top 7 richest people which was approximately $48.5 trillion in 2007. The world’s developed nations (around 1 billion population) formed 78% of global GDP in 2013. As world’s mere 0.12% the population controlled 26% of the global economic wealth in 2004, extreme economic inequality in today’s world has become more evident (Shah 2013). According to the 2014 report of Oxfam on the growing gap between the extreme poor and super rich claimed that the world’s 80 richest individuals have as much wealth as the 4 billion poorest people, over 50% of global population, in the world (Obscene wealth 2014). According to the 2012 reports of the United Nations Development Programme (UNDP), the Caribbean and Latin America continued to be the region with the highest level of income inequalities with Gini coefficient of 51.1 in 2006-07, followed by Africa and Asia with Gini coefficient of 42.5 and 38 respectively (Income Inequality 2012, p. 193-194). Even the income inequality and poverty is prominent in developed nations like, the United States. According to the official reports, the poverty rate in the United States in 2013 was 14.55%. In 2013, it was estimated that 45.5 million people were under poverty line. The poverty and unemployment rates gradually increased over the last few years mainly due to two financial recessions in 2001 and 2008 respectively (DeNavas-Walt & Proctor 2014, p. 12). In the US in the early 2000s, economic inequality was significantly higher than any other period since the 1900s, with the wealthiest 4% of total households gaining 6 times greater income than the poorest 25% of households (Yates 2004). Furthermore, a research by economist Paul Krugmen revealed that almost 75% of all the wealth growth in the US during the 1980s concentrated among the richest 0.9% of total households in the country. These richest 0.9% of all households owned 45% of all major stocks, 60% of all bonds, 40% of all real estates, and 75% of all businesses in the country by the end of 20th century (Yates 2004). The income inequality has been steadily increasing over last few years in the developed countries like, the US and developing and third world nations (Yates 2004). Poverty and Inequality: Serious Threats The staggering statistics of global poverty and economic inequality have highlighted the greatest issue in today’s global political economy. Various researches and experts have regularly warned the potential threats to global political economy and global security from growing inequality and poverty in the world. Impact on Third World Countries Poverty, especially where it is highly prevalent, has emerged as a significant barrier for social development and stable political environment for the economic growth and national security. The poverty in its worse form has caused pernicious impact on regions such as, Latin America, Africa, and Asia. According to the 2008 report of the World Bank, high child mortality rate, famine, high vulnerability to various diseases, absence or poor state of sanitation and heath care facilities, high rates of corruption, violence, crimes, and malnutrition are just some of the crucial problematic issues that developing and poor countries have suffered with due to high rates of poverty and inequality. These detrimental effects have triggered greater threats, affecting not only the Latin American, Asian, and African regions but also the rest of the world (Ottensooser 2011). The World Bank reports suggested that due to high rates of poverty, about 1 in every 3 Africans suffer from huger and majority of Africans are highly prone to chronic nutrition, often leading to death. In countries like, Ethiopia and Sudan, almost 100 of every 1000 children die from malnutrition or starvation by the age of 5 (Ottensooser 2011). Also, due to lack of funds, authorities in third world countries have found it difficult to provide basic health care facilities to their citizens. Ineffective healthcare facilities have triggered the high prevalence of severe diseases, like HIV/AIDS in such countries (Ottensooser 2011). In 2001, 1 in every 4 Africans was diagnosed with the epidemic. Almost 85% of total 34.3 million globally infected patients are residents of Sub-Saharan African regions where poverty has been recorded to its peak. This is known as Poverty/AIDS cycle and poverty has been widely responsible for the epidemic of such severe diseases in the world (Ottensooser 2011). Besides it, poverty has been directly associated with high rates of corruption and crimes. According to the reports of Barber & Bowie (2008), the rate of corruption and violent crimes is significantly greater among the instable and poor states compare to stable and developed states. Consequently, due to the perception of high corruption and poor governance in third world countries, developed countries have become less willing to transfer aid funds to local authorities. Donor states are instead channelling their funds through INGOs (International non-governmental organizations) and their associates in receiver states (Barber & Bowie, 2008, p. 749). In order to run these charity funds and impress visitors, the INGOs require effective and high-skilled local staff. Many researchers found that as majority of local high-skilled officials are lured away by INGOs, the quality and effectiveness of civil service in that country declines. Corruption rises and confidence of local government further declines. Furthermore, it promotes INGOs bureaucracy in local political and social sphere (Barber & Bowie, 2008, p. 749-751). In countries like, Malawi and Bangladesh, many local officials are unwilling to work with national governments due to lucrative employment offers of foreign NGOs in those countries (Karns et al., 2008, p. 180-190). Due to delicate balance of power between INGOs and governments in countries like Bangladesh, INGOs have become excessively dominant in local politics, societal roles, and public sectors (Karns et al., 2008, p. 184-195). Consequently, the governments in these countries are highly dependent on INGOs which has pave way to excessive freedom to INGO and trigger significant issues related to liability, transparency, and accountability of these INGOs and their policies as there is no effective system to oppose. Between 2009 and 2010, Somalia received over $1.2 billion foreign aid through the major sources like, the UNICEF, WFP, UNDP, and USAID, but most of it was misused by the corrupt local political actors, militants, and private agencies (Chêne, 2012, p. 3-4). In other words, poverty, high rates of corruption, crimes, instable political and economic conditions, abuse of aid and funds for illegal means and terrorism are directly related with one another and tied with the cycle of Poverty-Instable global political economy as all these factors eventually lead to the threat to global security and political and economic stability in global market through the acts of terrorism, civil wars, strikes, uprisings, and highly flawed economic policies of weak domestic governments and authorities (Sachs 2010, p. 174-190). Impact on Developed World Poverty is a great threat for global political economy mainly because its adverse effects aren’t limited to particular state or region rather it collectively affects all the societies. The effects of poverty in developed world are directly associated with security threats which eventually lead to economic burden in terms of causalities in terror attacks, crimes etc., and massive spending on security measures (McBride 2011, p. 135-139). After analyzing crime data from the National Longitudinal Surveys (NLSY), Bjark (2004) estimated that teens growing up in the extreme poverty or low income families are about 1.4 times more vulnerable to commit serious crimes compared with teens from the middle-class or high-income families (Holzer et al. 2007, p. 15-17). This findings are further supported by the research of Ageton and Elliot (1980) in which the authors used data from the National Youth Survey and analyzed particular pattern of serious and violent crimes and frequency and involvement of offending. The research found that youths from poor financial background reported committing almost 4 times more violent crimes than teens from middle class level (Holzer et al. 2007, p. 16-17). So, what are the costs of such crimes linked with poverty enforces on the United States? According to the recent reports of the Senate Judiciary Committee in 2006, total costs of crimes in the US were estimated to be around $2.1 trillion a year, of which almost $1.5 billion costs from “street crimes” in which majority of offenders were from poor economic backgrounds. Furthermore, the victimization expenses of street crimes exceed over $750 billion a year in the US (Holzer et al. 2007, p. 18-20). In other words, overall expenses associated with street crimes cost almost 1.2% of national GDP, highlighting the severity of poverty (Holzer et al. 2007, p. 20-21). Also, high rates of participation of poor population in crimes detach them from mainstream society. Their lowered productive activities generate a direct loss of services and goods to the US economy. According to the World Bank President James Wolfensahn, there is an explicit link between global terrorism and poverty. The root causes of global terrorism have various aspects. Among all causes, poverty stands at the top. Poverty is highly associated with lack of education and poor standard of living. Terrorist organizations such as, Al Qaeda exploit the misery of poor people and brainwash them to fight for Jihad (holy war against non-Muslims) (Bakker & Gill 2003, p. 1-31). In exchange of financial security for family, such poor people from third world countries are ready to do anything. In away, exploitation of poverty for the acts of terrorism is a great threat to the global security and overall global political economy (Young 2011). Further, chronic poverty is directly associated with unstable domestic political, economic, and social conditions, and continuous civil wars and riots. The widespread unrest in the Middle Eastern countries in 2012, i.e., Arab Spring, is a great example of potential threat of poverty and economic inequality to global political system. Soon after the revolution, regimes in Tunisia, Egypt, and Libya collapsed, stimulating economic crisis in the world as oil prices rapidly increased (Milligan 2011). In Syria, the civil war between President Assad’s government army and anti-government rebels brought Russia and the US once again against one another as both the great powers openly showed support to opposite groups. The ongoing standoff between the US and Russia over Syria and emergence of ISIS (Islamic State of Iraq and Syria) have further strengthened the fact that poverty is not an issue of only developing and third world countries, but directly and indirectly it causes tremendous threat to the security in whole world and stability of global political economy (Trenin, 2014, p. 14-17). Poverty and Neoliberal Capitalism: A Symbolic Relationship Today, the capitalist system is almost ruling the whole global political economy. Capitalism came into dominance especially after the profit-oriented economic reformation in China since the 1980s and after the collapse of another Communist power, Soviet Union, in 1991. In the best-selling publication A Theory of Global Capitalism, William Robinson defines capitalism as the system of production that is based on three fundamental pillars, i.e., freedom, profit, and competition. Within these 3 basic components, there exist entities that trigger the function of production system, such as Multinational Corporations (MNCs), state authorities, and neoliberal institutions, enabling massive capital inflow and market oriented policies (Robinson 2004, p. 2-68). So, how these actors generate overall development of society and financial security for common citizens. The answer is they don’t. The concept of neoliberal capitalism is based on the idea that the powerful developed states encourage a type of developments that disadvantage the common people of poor or third world countries in order to protect own economic and political interests (Amin, 1997, p. 12-40). The symbolic relationship between neoliberal capitalist system and poverty can be highlighted through various examples. A great example of it is a foreign aid policies in today’s global political economic system. Poverty in poor and developing states is considered to be beneficial for developed states and capitalism forces these nations to maintain the poverty level in poor countries in order to secure interests of organizations and entities from developed world linked with it (Lee1985, p. 18-23). In Food Aid or Food Sovereignty: Ending World Hunger in Our Time, Fedric Mousseau explained that instead encouraging agricultural developments in poor countries, developed states emphasize on vast flow of food aid under the tag of intervention against global huger. However, behind such policy lies hidden politics of economic interests (Roberts 2011). According to the 1986 Farm Bill, all the US food aid must be cultivated in the US and almost 76% of it must be shipped only in the US ships. The policy is in the best interest of American agricultural lobbies rather than third world countries’ development. The US government gives massive agricultural subsidies to American farmers. In return, giant agricultural lobbies supply cheap production to government which further exported to the markets of poor countries under the name of food aid (Roberts 2011). Consequently, the markets in poor countries are usually flooded with cheap foreign foods, destroying the local farmers. In a way, poverty of local farmers further intensifies while the agribusinesses in developed world secure massive profits. Similarly, cheap labour from poor countries is exploited under the capitalist system (Roberts 2011). Between 1995 and 2002, the number of official migrant workers from Latin America to the US significantly increased from mere 1 million to 8 million. The number of illegal immigrants is estimated to be over 10 million in the US. Most of these workers are absorbed into agricultural and industrial sectors where they are usually exploited by the owners by providing extreme low wages, absence of basic living facilities merely to maximize own profits (Bakker & Gill 2003, p. 7-9). Sweatshops in poor countries like, Bangladesh, Philippines, Pakistan, and Nigeria are another harsh reality of today’s capitalist system. Many well-known apparel brands from the developed world have moved their production lines in such poor countries in pursue of cheap labour. According to the research of David Wilson, the labour costs constitute merely 1-2% of total production cost for MNCs from developed world. Labour from the poor countries who work on merely 0.2 to 0.3 $ per hour remain in poverty while such multinational brands accumulated over billions of profits per year (Wilson 2013). Also, the offshoring of many industries from rich countries to poor countries has generated high unemployment rates among low-skill workers from developed world, triggering poverty in such communities. In other words, capitalist system is worsening the issue of global poverty rather than tacking it. The Role of Neoliberalism and Counterarguments against Capitalism Neoliberalism is just another face of capitalism based on the principles of market fundamentalisms, control of economic sources, and cult of wealthy and influential entities rather than national or racial ideology. Today, imperialism and globalization can be evaluated separately from neoliberal theory. The ideology rapidly evolved after the end of World War II to prevent the growth of cooperation between capitalists and workers, which was popularly known as the New Deal in the United States (Harvey 2007, p. 1-5). The neoliberal capitalist ideology emphasize on control over major political and economic sources in order to maximize own profits through any means such as, imperialism, exploitation of low-income or poor societies etc. The military intervention of the US in Iraq in 2003 is a great example of it. Over the years, controlling vast Middle-Eastern oil sources has been topmost foreign policy of the US government (Norley 2014). The control over the Gulf oil allows the US to dominate global economy and indirectly control global oil prices. Before 2003, no Western oil corporations were present in Iraq. However, the Iraq War in 2003 allowed the US companies to take control of Iraqi oil sources which are considered to be 2nd largest oil reserves in the world (Norley 2014). The US military invention in the US can be analyzed as the systematic, well-planned move under the influence of neoliberal capitalist ideology to secure own economic interests regardless of the possibility of exploitation of poor Iraqi civilians due to war and later through control of national resources by foreign capitalist organizations. Further, the advocates of capitalist system often present argument by claiming growing wealth in the world and steadily lowering poverty in the US. Here, it is necessary to consider the actual facts rather than virtual assumption of progress and development in the world under capitalist system. The deeper analysis of poverty data in the US presents different reality. Even though it is widely considered that poverty has been reduced in the US over last few years, the progress has been achieved mainly by raising majority of people just above the ultra-poverty line instead of improving their overall living standards (DaCosta 2015). In other words, on paper, even though majority of these people are above ultra-poverty line, in practical life, how one can considered them out of poverty when majority of them still struggle to make ends meet and lack basic living standard. Conclusion In conclusion, poverty is one of the greatest issues in today’s global political economic system. Global poverty causes immense threat to global security, political and economic stability, and overall development of third world countries. Today’s capitalistic system has further worsened the issue of poverty by exploiting poor people and weak states from global society. Capitalism in combination of neoliberalism has further widened the gap between poor and rich, triggering instability and conflicts in many parts of the world. It is necessary for the international organizations, state actors, and domestic entities to work together and collectively find effective and practical solutions to prevent potential threats associated with growing poverty and inequality in the world. Reference List Amin, S 1997, Capitalism in the age of globalization, Zed book, London. Bakker, I & Gill, S 2003, Power, Production and Social Reproduction, Palgrave Macmillan, New York. Barber, M & Bowie, C 2008, ‘How international NGOs could do less harm and more good’, Development in Practice, vol. 18, no. 6, pp. 748-754, viewed 16 March 2015, . Chêne, M 2012, ‘Overview of corruption and anti-corruption in Somalia’, U4 Anti-Corruption Resource Center, vol. 337, pp. 1-8, viewed 16 March 2015, . DaCosta, PN 2015, Is Global Poverty Falling? Not in Absolute Terms, The Wall Street Journal, viewed 16 March 2015, . DeNavas-Walt, C & Proctor, BD, 2014, Income and Poverty in the United States: 2013, United States Census Bureau, pp. 1-61, viewed 16 March 2015, . DeRegil, AJ 2001, An Ocean of Inequality: The Effects of Globalisation on the “Developing” World, The Neo Capitalist Assault, viewed 16 March 2015, . Harvey, D 2007, A Brief History of Neoliberalism, Oxford University Press Inc., New York. Holzer, H, Schanzenbach, DW, Duncan, DJ, & Ludwig, J 2007, The Economic Costs of Poverty in the United States: Subsequent Effects of Children Growing Up Poor, Institute for Research on Poverty, pp. 1-30, viewed 16 March 2015, . Hutton, W 2014, Capitalism simply isn’t working and here are the reasons why, the Guardian, viewed 16 March 2015, . Income Inequality and the Condition of Chronic Poverty, 2012, Towards Human Resilience: Sustaining MDG Progress in an Age of Economic Uncertainty, p. 186-222, viewed 16 March 2015, . Karns, MP, Shaffer, TJ, & Ghere, RK 2008, ‘The challenges of accountability for international nongovernmental and civil-society organizations’, academia.edu, vol. 11, pp. 180-196, viewed 16 March 2015, . Lee, DR 1985, ‘The Politics of Poverty and the Poverty of Politics’, CATO Journal, vol. 5, p. 17-35, viewed 16 March 2015, . McBride, S 2011, ‘Introduction: Confronting global poverty and inequality’, Global Social Policy, vol. 11, no. 2-3, pp. 134-151, viewed 16 March 2015, doi: 10.1177/1468018111421274. Milligan, S 2011, Egypt Protests Show That Poverty Is a Threat to Global Security, US News, viewed 16 March 2015, . Norley, MR 2014, Capitalism and Insecurity: A Symbiotic Relationship, E-International Relations Students, viewed 16 March 2015, . Obscene wealth: World’s 85 richest have same wealth as 3.5 billion poorest-Oxfam, 2014, RT, viewed 16 March 2015, . Ottensooser, J 2011, Poverty from an International Economics perspective – effects and proposed solutions, Oats and Sugar, viewed 16 March 2015, . Piketty, T 2013, Capital in the Twenty-First Century, The Harvard College, the US. Roberts, M 2011, Does US Food Aid Cause Famine? Penn Political Review (PPN), viewed 16 March 2015, . Robinson, WI 2004, A Theory of Global Capitalism: Production, Class and State in a Transnational World, The Johns Hopkins University Press, Maryland. Sachs, W 2010, The development dictionary, Zed Books, London. Shah, A 2013, Poverty Facts and Stats, Global Issues, viewed 16 March 2015, . Trenin, D 2014, The Ukrainian crisis and the resumption of great-power rivalry, Carnegie Moscow Center, pp. 1-27, viewed 16 March 2015, . Wilson, DL 2013, Who really benefits from sweatshops? Climate & Capitalism, viewed 16 March 2015, . Yates, MD 2004, ‘Poverty and Inequality in the Global Economy’, Monthly Review, vol. 55, no. 9, viewed 16 March 2015, . Young, K 2011, The Strange Non-Death of Neoliberalism, Times Higher Education (THE), viewed 16 March 2015, . Read More