The Contemporary World

What Is Globalization?
Globalization is the spread of products, technology, information, and jobs across national borders and
cultures. In economic terms, it describes an interdependence of nations around the globe fostered
through free trade.

On the upside, it can raise the standard of living in poor and less developed countries by providing job
opportunity, modernization, and improved access to goods and services. On the downside, it can
destroy job opportunities in more developed and high-wage countries as the production of goods
moves across borders.

Globalization motives are idealistic, as well as opportunistic, but the development of a global free
market has benefited large corporations based in the Western world. Its impact remains mixed for
workers, cultures, and small businesses around the globe, in both developed and emerging nations.

Globalization Explained
Corporations gain a competitive advantage on multiple fronts through globalization. They can reduce
operating costs by manufacturing abroad. They can buy raw materials more cheaply because of the
reduction or removal of tariffs. Most of all, they gain access to millions of new consumers.

Globalization is a social, cultural, political, and legal phenomenon.

Socially, it leads to greater interaction among various populations.

Culturally, globalization represents the exchange of ideas, values, and artistic expression among
cultures.
Globalization also represents a trend toward the development of single world culture.
Politically, globalization has shifted attention to intergovernmental organizations like the United
Nations (UN) and the World Trade Organization (WTO).
Legally, globalization has altered how international law is created and enforced.

KEY TAKEAWAYS
Globalization has sped up to an unprecedented pace since the 1990s, with public policy changes and
communications technology innovations cited as the two main driving factors.
China and India are among the foremost examples of nations that have benefited from globalization.
One clear result of globalization is that an economic downturn in one country can create a domino
effect through its trade partners.

The History of Globalization

Globalization is not a new concept. Traders traveled vast distances in ancient times to buy
commodities that were rare and expensive for sale in their homelands. The Industrial Revolution
brought advances in transportation and communication in the 19th century that eased trade across
borders.

The think tank, Peterson Institute for International Economics (PIIE), states globalization stalled after
World War I and nations' movements toward protectionism as they launched import taxes to more
closely guard their industries in the aftermath of the conflict. This trend continued through the Great
Depression and World War II until the U.S. took on an instrumental role in reviving international trade.

Globalization has since sped up to an unprecedented pace, with public policy changes and
communications technology innovations cited as the two main driving factors.
One of the critical steps in the path to globalization came with the North American Free Trade
Agreement (NAFTA), signed in 1993. One of NAFTA's many effects was to give American auto
manufacturers the incentive to relocate a portion of their manufacturing to Mexico where they could
save on the costs of labor. As of February 2019, the NAFTA agreement was due to be terminated,
and a new trade agreement negotiated by the U.S., Mexico, and Canada was pending approval by
the U.S. Congress.

Governments worldwide have integrated a free market economic system through fiscal policies and
trade agreements over the last 20 years. The core of most trade agreements is the removal or
reduction of tariffs.

This evolution of economic systems has increased industrialization and financial opportunities in
many nations. Governments now focus on removing barriers to trade and promoting international
commerce.

Globalization Advantages
Proponents of globalization believe it allows developing countries to catch up to industrialized nations
through increased manufacturing, diversification, economic expansion, and improvements in
standards of living.

Outsourcing by companies brings jobs and technology to developing countries. Trade initiatives
increase cross-border trading by removing supply-side and trade-related constraints.

Globalization has advanced social justice on an international scale, and advocates report that it has
focused attention on human rights worldwide.

Disadvantages of Globalization
One clear result of globalization is that an economic downturn in one country can create a domino
effect through its trade partners. For example, the 2008 financial crisis had a severe impact on
Portugal, Ireland, Greece, and Spain. All these countries were members of the European Union,
which had to step in to bail out debt-laden nations, which were thereafter known by the acronym
PIGS.

Globalization detractors argue that it has created a concentration of wealth and power in the hands of
a small corporate elite which can gobble up smaller competitors around the globe.

Globalization has become a polarizing issue in the U.S. with the disappearance of entire industries to
new locations abroad. It's seen as a major factor in the economic squeeze on the middle class.

For better and worse, globalization has also increased homogenization. Starbucks, Nike, and Gap
Inc. dominate commercial space in many nations. The sheer size and reach of the U.S. have made
the cultural exchange among nations largely a one-sided affair.

Real World Examples of Globalization

A car manufacturer based in Japan can manufacture auto parts in several developing countries, ship
the parts to another country for assembly, then sell the finished cars to any nation.

China and India are among the foremost examples of nations that have benefited from globalization,
but there are many smaller players and newer entrants. Indonesia, Cambodia, and Vietnam are
among fast-growing global players in Asia.
Ghana and Ethiopia had the fastest-growing African economies in the world in 2018, according to a
World Bank report.
8 Theories of Globalization
1. Theory of Liberalism:
Liberalism sees the process of globalisation as market-led extension of modernisation. At the most
elementary level, it is a result of ‘natural’ human desires for economic welfare and political liberty. As
such, transplanetary connectivity is derived from human drives to maximise material well-being and to
exercise basic freedoms. These forces eventually interlink humanity across the planet.

They fructify in the form of:

(a) Technological advances, particularly in the areas of transport, communications and information
processing, and,

(b) Suitable legal and institutional arrangement to enable markets and liberal democracy to spread on
a trans world scale.

Such expla-nations come mostly from Business Studies, Economics, International Political Economy,
Law and Politics. Liberalists stress the necessity of constructing institutional infrastructure to support
globalisation. All this has led to technical standardisation, administrative harmonisation, trans-lation
arrangement between languages, laws of contract, and guarantees of property rights.

But its supporters neglect the social forces that lie behind the creation of technological and
institutional underpinnings. It is not satis­fying to attribute these developments to ‘natural’ human
drives for economic growth and political liberty. They are culture blind and tend to overlook historically
situated life-worlds and knowledge structures which have promoted their emergence.

All people cannot be assumed to be equally amenable to and desirous of increased globality in their
lives. Similarly, they overlook the phenomenon of power. There are structural power inequalities in
promoting globalisation and shaping its course. Often they do not care for the entrenched power
hierarchies between states, classes, cultures, sexes, races and resources.

2. Theory of Political Realism:

Advocates of this theory are interested in questions of state power, the pursuit of national interest,
and conflict between states. According to them states are inherently acquisitive and self-serving, and
heading for inevitable competition of power. Some of the scholars stand for a balance of power,
where any attempt by one state to achieve world dominance is countered by collective resistance
from other states.

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Another group suggests that a dominant state can bring stability to world order. The ‘hegemon’ state
(presently the US or G7/8) maintains and defines international rules and institutions that both
advance its own interests and at the same time contain conflicts between other states. Globalisation
has also been explained as a strategy in the contest for power between several major states in
contem-porary world politics.

They concentrate on the activities of Great Britain, China, France, Japan, the USA and some other
large states. Thus, the political realists highlight the issues of power and power struggles and the role
of states in generating global relations.
At some levels, globalisation is considered as antithetical to territorial states. States, they say, are not
equal in globalisation, some being dominant and others subordinate in the process. But they fail to
understand that everything in globalisation does not come down to the acquisition, distribution and
exercise of power.

Globalisation has also cultural, ecological, economic and psychological dimensions that are not
reducible to power politics. It is also about the production and consumption of resources, about the
discovery and affir-mation of identity, about the construction and communication of meaning, and
about humanity shaping and being shaped by nature. Most of these are apolitical.

Power theorists also neglect the importance and role of other actors in generating globalisation.
These are sub-state authorities, macro-regional institutions, global agencies, and private-sector
bodies. Additional types of power-relations on lines of class, culture and gender also affect the course
of globalisation. Some other structural inequalities cannot be adequately explained as an outcome of
interstate competition. After all, class inequality, cultural hierarchy, and patriarchy predate the modern
states.

3. Theory of Marxism:
Marxism is principally concerned with modes of production, social exploi-tation through unjust
distribution, and social emancipation through the transcendence of capitalism. Marx himself
anticipated the growth of globality that ‘capital by its nature drives beyond every spatial barrier to
conquer the whole earth for its market’. Accordingly, to Marxists, globalisation happens because
trans-world connectivity enhances opportu-nities of profit-making and surplus accumulation.

Marxists reject both liberalist and political realist explanations of globalisation. It is the outcome of
historically specific impulses of capitalist development. Its legal and insti-tutional infrastructures serve
the logic of surplus accumulation of a global scale. Liberal talk of freedom and democracy make up a
legitimating ideology for exploitative global capitalist class relations.

The neo-Marxists in dependency and world-system theories examine capitalist accumulation on a

global scale on lines of core and peripheral countries. Neo-Gramscians highlight the significance of
underclass struggles to resist globalising capitalism not only by traditional labour unions, but also by
new social movements of consumer advocates, environmentalists, peace activists, peasants, and
women. However, Marxists give an overly restricted account of power.

There are other relations of dominance and subordination which relate to state, culture, gender, race,
sex, and more. Presence of US hegemony, the West-centric cultural domination, masculinism, racism
etc. are not reducible to class dynamics within capitalism. Class is a key axis of power in
globalisation, but it is not the only one. It is too simplistic to see globalisation solely as a result of
drives for surplus accumulation.

It also seeks to explore identities and investigate meanings. People develop global weapons and
pursue global military campaigns not only for capitalist ends, but also due to interstate competition
and militarist culture that predate emergence of capitalism. Ideational aspects of social relations also
are not outcome of the modes of production. They have, like nationalism, their autonomy.

4. Theory of Constructivism:
Globalisation has also arisen because of the way that people have mentally constructed the social
world with particular symbols, language, images and interpretation. It is the result of particular forms
and dynamics of consciousness. Patterns of production and governance are second-order structures
that derive from deeper cultural and socio-psychological forces. Such accounts of globalisation have
come from the fields of Anthropology, Humanities, Media of Studies and Sociology.
Constructivists concentrate on the ways that social actors ‘construct’ their world: both within their own
minds and through inter-subjective communication with others. Conver-sation and symbolic
exchanges lead people to construct ideas of the world, the rules for social interaction, and ways of
being and belonging in that world. Social geography is a mental experience as well as a physical fact.
They form ‘in’ or ‘out’ as well as ‘us’ and they’ groups.

They conceive of themselves as inhabitants of a particular global world. National, class, religious and
other identities respond in part to material conditions but they also depend on inter-subjective
construction and communication of shared self-understanding. However, when they go too far, they
present a case of social-psychological reductionism ignoring the significance of economic and
ecological forces in shaping mental experience. This theory neglects issues of structural inequalities
and power hierarchies in social relations. It has a built-in apolitical tendency.

5. Theory of Postmodernism:
Some other ideational perspectives of globalisation highlight the signifi-cance of structural power in
the construction of identities, norms and knowledge. They all are grouped under the label of
‘postmodernism’. They too, as Michel Foucault does strive to understand society in terms of
knowledge power: power structures shape knowledge. Certain knowledge structures support certain
power hierarchies.

The reigning structures of understanding determine what can and cannot be known in a given socio-
historical context. This dominant structure of knowledge in modern society is ‘rationalism’. It puts
emphasis on the empirical world, the subordi-nation of nature to human control, objectivist science,
and instrumentalist efficiency. Modern rationalism produces a society overwhelmed with economic
growth, technological control, bureaucratic organisation, and disciplining desires.

This mode of knowledge has authoritarian and expan-sionary logic that leads to a kind of cultural
imperialism subordinating all other epistemologies. It does not focus on the problem of globalisation
per se. In this way, western rationalism overawes indigenous cultures and other non-modem life-
worlds.

Postmodernism, like Marxism, helps to go beyond the relatively superficial accounts of liberalist and
political realist theories and expose social conditions that have favoured globalisation. Obviously,
postmodernism suffers from its own methodological idealism. All material forces, though come under
impact of ideas, cannot be reduced to modes of consciousness. For a valid explanation,
interconnection between ideational and material forces is not enough.

6. Theory of Feminism:
It puts emphasis on social construction of masculinity and femininity. All other theories have identified
the dynamics behind the rise of trans-planetary and supra-territorial connectivity in technology, state,
capital, identity and the like.

Biological sex is held to mould the overall social order and shape significantly the course of history,
presently globality. Their main concern lies behind the status of women, particularly their structural
subordination to men. Women have tended to be marginalised, silenced and violated in global
communication.

7. Theory of Trans-formationalism:
This theory has been expounded by David Held and his colleagues. Accord-ingly, the term
‘globalisation’ reflects increased interconnectedness in political, economic and cultural matters across
the world creating a “shared social space”. Given this interconnectedness, globalisation may be
defined as “a process (or set of processes) which embodies a transformation in the spatial
organisation of social relations and transactions, expressed in trans-continental or interregional flows
and networks of activity, interaction and power.”

While there are many definitions of globalisation, such a definition seeks to bring together the many
and seemingly contradictory theories of globalisation into a “rigorous analytical framework” and
“proffer a coherent historical narrative”. Held and McGrew’s analytical framework is constructed by
developing a three part typology of theories of globalisation consisting of “hyper-globalist,” “sceptic,”
and “transformationalist” categories.

The Hyperglobalists purportedly argue that “contemporary globalisation defines a new era in which
people everywhere are increasingly subject to the disciplines of the global marketplace”. Given the
importance of the global marketplace, multi-national enterprises (MNEs) and intergov-ernmental
organisations (IGOs) which regulate their activity are key political actors. Sceptics, such as Hirst and
Thompson (1996) ostensibly argue that “globalisation is a myth which conceals the reality of an
interna-tional economy increasingly segmented into three major regional blocs in which national
governments remain very powerful.” Finally, transformationalists such as Rosenau (1997) or Giddens
(1990) argue that globalisation occurs as “states and societies across the globe are experi­encing a
process of profound change as they try to adapt to a more interconnected but highly uncertain world”.

Developing the transformationalist category of globalisation theories. Held and McGrew present a
rather complicated typology of globalisation based on globalization’s spread, depth, speed, and
impact, as well as its impacts on infrastructure, institutions, hierarchical structures and the
unevenness of development.

They imply that the “politics of globalisation” have been “transformed” (using their word from the
definition of globalisation) along all of these dimensions because of the emergence of a new system
of “political globalisation.” They define “political globalisation” as the “shifting reach of political power,
authority and forms of rule” based on new organisa­tional interests which are “transnational” and
“multi-layered.”

These organisational interests combine actors identified under the hyper-globalist category (namely
IGOs and MNEs) with those of the sceptics (trading blocs and powerful states) into a new system
where each of these actors exercises their political power, authority and forms of rule.

Thus, the “politics of globalisation” is equivalent to “political globalisation” for Held and McGrew.
However, Biyane Michael criticises them. He deconstructs their argument, if a is defined as
“globalisation” (as defined above), b as the organisational interests such as MNEs, IGOs, trading
blocs, and powerful states, and c as “political globalisation” (also as defined above), then their
argument reduces to a. b. c. In this way, their discussion of globalisation is trivial.

Held and others present a definition of globalisation, and then simply restates various elements of the
definition. Their definition, “globalisation can be conceived as a process (or set of processes) which
embodies a transformation in the spatial organisation of social relations” allows every change to be
an impact of globalisation. Thus, by their own definition, all the theorists they critique would be
considered as “transformationalists.” Held and McGrew also fail to show how globalisation affects
organisational interests.

8. Theory of Eclecticism:
Each one of the above six ideal-type of social theories of globalisation highlights certain forces that
contribute to its growth. They put emphasis on technology and institution building, national interest
and inter-state compe-tition, capital accumulation and class struggle, identity and knowledge
construction, rationalism and cultural imperialism, and masculinize and subordination of women. Jan
Art Scholte synthesises them as forces of production, governance, identity, and knowledge.

Accordingly, capitalists attempt to amass ever-greater resources in excess of their survival needs:
accumulation of surplus. The capitalist economy is thoroughly monetised. Money facilitates
accumulation. It offers abundant opportunities to transfer surplus, especially from the weak to the
powerful. This mode of production involves perpetual and pervasive contests over the distribution of
surplus. Such competition occurs both between individual, firms, etc. and along structural lines of
class, gender, race etc.

Their contests can be overt or latent. Surplus accumulation has had transpired in one way or another
for many centuries, but capitalism is a comparatively recent phenomenon. It has turned into a
structural power, and is accepted as a ‘natural’ circumstance, with no alternative mode of production.
It has spurred globalisation in four ways: market expansion, accounting practices, asset mobility and
enlarged arenas of commodification. Its technological innovation appears in communication, transport
and data processing as well as in global organisation and management. It concentrates profits at
points of low taxation. Information, communication, finance and consumer sectors offer vast
potentials to capital making it ‘hyper-capitalism’.

Any mode of production cannot operate in the absence of an enabling regulatory apparatus. There
are some kind of governance mechanisms. Governance relates processes whereby people formulate,
implement, enforce and review rules to guide their common affairs.” It entails more than government.
It can extend beyond state and sub-state institutions including supra-state regimes as well. It covers
the full scope of societal regulation.

In the growth of contemporary globalisation, besides political and economic forces, there are material
and ideational elements. In expanding social relations, people explore their class, their gender, their
nationality, their race, their religious faith and other aspects of their being. Constructions of identity
provide collective solidarity against oppression. Identity provides frameworks for community,
democracy, citizenship and resistance. It also leads from nationalism to greater pluralism and
hybridity.

Earlier nationalism promoted territorialism, capitalism, and statism, now these plural identities are
feeding more and more globality, hyper-capitalism and polycentrism. These identities have many
international qualities visualised in global diasporas and other group affiliations based on age, class,
gender, race, religious faith and sexual orientations. Many forms of supra-territorial solidarities are
appearing through globalisation.