Economic globalisation

Economic globalisation is:

• The process of national economies being absorbed into a single, global economy.
• OECD defined it as 'a shift from a world of distinct national economies, to a global economy, in which production is internationalised and financial capital flows freely, and instantly around countries.
• Economic globalisation promotes neoliberalism, where the economy is best left alone by the government, and therefore, free market economics and unregulated market capitalsm are in place.
• This delivers efficiency growth and widespread prosperity.
• E.g. Neoliberal policies are adopted by liberal institutions, such as the IMF, World Bank and WTO.

When did economic globalisation come into place:

• Economic globalisation came into existence, after the Second World War, as a result of the Bretton Woods System and Marshall Plan.
• This was where they adopted Keynesianism to deliver sustained growth.
• The globalised economy developed due to the development of globalised capitalism.
• The risk of economic globalisation is increased by neoliberalism, which expands the economy, and reduces the likelihood of war, due to TRADE NOT WAR.
• However, economic globalisation promotes neoliberal economic policies, sch as cutting taxes for the rich.
• These are promoted by the IMF and WB, who lend money to countries in debt.
  • E.g. Indonesia borrowed money for the WB, but had to adopt neo-liberal policies in return, leaving the poor to pick up the pieces. 'The CORE' takes advantage of their cheap labour.
• On the other hand, it can be argued that economic globalisation cam make the poor less poor because of international trade, allowing countries to produce goods of their speciality.

Neoliberalism has a number of positives, which includes:

• 1). Expands the economy
• 2). Allows meritocracy, where poorer people have the chance to evolve and become richer.
• 3). Helps countries who are in desperate need- as they are given loans to help them pay off their debt.
• 4). Reduces the likelihood of war, as trade is central in economic globalisation.

However, neoliberalism has a number of criticisms which include:

• 1). Cut taxes for the rich, shifting the tax burden on the poor.
• 2). Creates further subordinate labour to the demands of the capital.
• 3). Promotes neoliberal globalisation, including cheap labour and undermining national industries amd domestic labour.
• 4). No business regulation, removing restrictions of business activities, such as labour, consumer and environmental protection.
• 5). Privatisation- where state owned services are privatised.
  • E.g. Margaret Thatcher's privatisation of telephone services.

As a result, KEYNESIANISM has been put into place.

What is Keynesianism:

• This is the process of using the nation's resources to re-invest in public services, to promote industrial output.
• E.g. The new Chancellor of the Exechequer, Phillip Hammond, is keen to invest in Britain's social services (one-nationism), instead of reducing the deficit.
• However, if this keynesianism fails, it will just add to their debt, which will lead to neoliberalism.
• This is because, in Greece, they tried to reinvest in their social services, but failed to do so, which led to an increase in their debt.
• As a result, Greece had to adopt neoliberal economic policies, to recieve loans from the IMF anf the World Bank to bail them out