Globalization, Inequality, and Neo-Marxists

Globalization
- Globalization generally relates to the shrinking of time and geographical space, both of which has
been facilitated by two key innovations, both of which were made available in the post-1945
world:
- The transport revolution, which has made it extremely cheap to ship and travel vast
distances of the globe by sea or by air
- The communications revolution, which has made it extremely easy and affordable to
communicate instantly to practically anywhere on earth
- We use this everyday especially through text message, social media etc.

Globalization definition
- Globalization is a ‘social process in which the constraints of geography on social and cultural
arrangements recede and in which people become increasingly aware that they are receding’
(Waters 1995: 3)
- Social process is going on as well
- ‘The internationalization process results when capital considers the productive resources of the
world as a whole and locates elements of complex globalized production systems at points of
greatest cost advantage. The critical factor is information on how most profitably to combine
components in that production process … Producing units take advantage of abundant, cheap, and
malleable labour where it is to be found, and of robotization where it is not’ (Cox 1991: 336)

What is capitalism?
A capitalist economic system features two major characteristics:
1. means of production (e.g. land, factories, machines, patents) are owned by individuals or
companies; only rarely are they owned by the state (government)
2. workers are hired (and paid a wage) to produce goods and services that are then sold on the
market for profit
An inherent strength of the capitalist system is its ability to create wealth by stimulating economic
activity, but it also generates inequality and is prone to cycles of boom and busts (recessions and
depressions)

Marketization: the introduction and enshrinement of private property, free competition between firms,
and the acceptance of (foreign) investment – seems to be the defining characteristic of economic
globalization
- Basically saying that markets are good
- affected nominally ‘communist’ states like China, Vietnam and Cuba
- The idea is that the market is a better generator of wealth and determinant of prices than the state
(government)
- Companies trying to increase their profit through marketization
- market is better generated of wealth
Globalization: an unstoppable force of nature
- Globalization is often seen as beyond the immediate control of state actors, or as an inevitable,
outside force to which actors in the international system must respond and adapt
- But this phenomenon was created and driven forward by states – by their many policies -- and in
turn encouraged by financial actors like MNCs (it was about transport revolution)
- Globalization is a choice made by governments that consciously decide to reduce barriers
to trade and investment, adopt new policies toward international money and finance, and
chart fresh economic courses. Decisions made by each government are interconnected;
international finance, international trade, and international monetary relations depend on
the joint actions of national governments around the world’ (Frieden 2006)
- Constructivist would say this makes sense and that its a good meaning

Realist IPE: Welcome to the (economic) jungle

- States are rational and self-interested (greedy), and concerned with their own security (selfhelp)
- The economy is largely a means to maintain or increase that power in a zero-sum competition;
that is, the losses for one side are seen as a gain for the other
- ‘Where military security prevails, such as in the most of the industrialized democracies,
there has merely been a shift in the form of insecurity to the economic or psychological
realms, as nations seek to increase economic competitiveness and to reduce
unemployment’ (Isaac 1995)
- The shift to seek security is in employment realm you want less unemployment
and more jobs for individuals
- The spoils of victory will include industrial supremacy, technology and information leadership,
and the economic capacity to sustain a modern military
- The ‘losing’ states will face the problems created by reduce fiscal resources:
- unreliable economic growth and less financial resources
- relegation to the ranks of resource extraction, branch plant, or cash-crop economies
- second-rate technology and information systems
- a cycle of poverty and no real economic route of escape

Liberal IPE: Things just keep getting better and better

- Individuals, households and firms maximize their opportunity to pursue mutually beneficial
exchanges (positive-sum gains) in the global marketplace; all parties can gain from cooperation
(including trade)
- Through comparative advantage and specialization (‘do what you do best, buy the rest’), free
trade will generate benefits for all through the efficient use of capital and resources
- Its efficient bc everyone is specializing and trading their goods with one another
- E.g china does airplane, cuba does banana and then will trade one another
- State intervention is unwanted, inefficient, and only creates more obstacles to market activity,
according to classical liberals (commonly known as ‘neoliberals’ today)
- Neoliberal; offspring of classical liberal basically → idea of free trade, minimal govt
interference, protecting the border
- The institutions of the world economy (such as the WTO, IMF, World Bank) were built and/or
are informed by these liberal economic principles, such as:
 - tariff reduction (taxes between countries), non-discriminatory treatment (dont treat goods
any less or more than other goods), and the harmonization of regulations (everyone has
the same standard e.g labour)
- Rational actors (states and MNCs) will converge in common institutions and regimes – this is at
the heart of the ‘global governance’ approach

Critical theories: challenging the status quo

- Critical theories encompass many different theories, such as neo-Marxism, feminism and
postmodernism; they are lumped together as ‘critical theories’ because they challenge more
mainstream variation of realism and liberalism in two central ways:
1. ‘critical theories’ reject the epistemological orthodoxy of positivism
- According to post-positivists, ‘reality’ is inherently subjective and is dependent
on the nature of the viewer; there are no universal ‘truths’ exist and we can’t
identify them through empirical observation and the testing of hypotheses (e.g.
the ‘scientific method’)
- You cant use scientific method in social science bc they are bias
- All observers are embedded in social contexts and in power relations previously
socially constructed by others; ‘reality’ is therefore also dependent on the ideas
shared by groups of people and how these ideas form their identities
2. ‘critical theories’ emphasize questions of social justice, while the realist and liberal
frameworks serve to preserve an unjust status quo
- This is a big problem bc liberal and realist don't talk enough about injustice

A dog-eat-dog world – now let’s change it: For ‘critical’ theorists, history can be seen as a narrative of the
domination, exploitation, and marginalization of one group by another; for neo-Marxists, Global North
imperialist powers over the Global South; for feminists, men over women; and for post-colonial theorists,
the whites over non-white races.

Marxism: Workers of the world

- The ideas of Karl Marx (1818-1883) were influenced by the ideas and experiences of the French
Revolution, the (British) Industrial Revolution, and German philosophy
- He saw exploitation for women and children in industry (revolution)
- The Marxist worldview is materialist; that is, throughout history, the political nature of society
was determined by its economic structure
- Look at economic relations
- Under capitalism, society is divided into two classes with that division determined by the basis of
one’s relationship to the means of production

1. The bourgeoisie (capitalists) own the factories, land, machines, etc, and govern society in their
own interests
- They also control technology, natural resources, property, patents, etc
- They also dominate religious, philosophical, governmental, legal, and moral values
(especially neo-Gramscians)
 2. The proletariat (workers) do not own the means of production; instead, they’re forced to sell
their labour to the bourgeoisie (capitalists) in return for payment to survive
- Classes are the social engines of history; the state is merely a vehicle of the ruling
economic class; it exists primarily to serve the interests and not those of society as a
whole
- The capitalist system is inherently exploitative and unjust; only through a revolution of
the proletariat and the overthrow of the bourgeoisie would this lead to a communist
society without classes (and therefore without exploitation)

Neo-marixism: bringing marx’s ideas into international affairs

- Marxist thinkers such as Hobson, Luxemburg and Lenin wrote about the international impact of
capitalism, which they considered to be the primary cause of imperialism
- As the domestic economies of the European powers ran out of markets, they needed to
expand into non-European regions to find new markets, natural resources and to export
capital (to generate profits); this in turn led to conflict between capitalist empires over
territory and resources, which led to WWI and various other conflicts (according to neo-
Marxists)

Workers have to work for capitalist in order to survive

Classes are the social engine of history according to Marx and the states is a vehicle of the economic
class it exists to serve the interest and not the social of whole → they're not focus on state, they’re
focus on classes

Neo-marxism: Bringing Marx’s ideas into international affairs

- Marxist thinkers such as Hobosn, Luxembourg and Lenin wrote about the international impact of
capitalism, which they considered to be the primary cause of imperialism
- As the domestic economies of the European powers ran out of markets they needed to
expand into non-european regions to find new markets, natural resources, and to export
capital (to generate profit); this in turn led to conflict between capitalists empires over
territory and resources, which led to WWI and various other conflicts according to neo
marixts

Common assumptions of neo-marxism

- Economic classes are the primary units of analysis in world affairs
- Economic growth experienced by the rich world (‘core’) has come at the expense of
others, namely those on the ‘periphery’ of the world economy
- The poor gets poorer and the richer get richer → neo marxist pov bc of capitalism
- The state is an instrument of the ruling economic classes
- State is an instrument of ruling class the state is not an independent actor of doing what it
wants
- States (and their ruling elites) are bound into hierarchical structural relationship, characterized by
patterns of dominance and dependence
- A vast gap in power exists between the rich and the poor, and this is attributed largely to their
relationship to the means of production in national and global economies
 - For the marginalized and dependent states and peoples everywhere, revolution and the overthrow
of the world capitalist system are the only hope for change
- More moderate or pragmatic neo-Marxists call for a ‘delinking’ (e.g. withdrawing) from
the world economy

World systems theory, a neo-marxist variant: the rich get richer

- According to World Systems Theory, a neo-Marxist variant, capitalism has expanded worldwide
to become a global system that transfers wealth from poor countries and peoples (the periphery)
to rich countries and peoples (the core)
- Rich countries are exploiting poor countries
- An important international network thus exists involving local political elites and capitalists
(often one and the same), the state apparatus in poor countries, MNCs, and political elites and
capitalists in rich countries
- As a result, the world is not interdependent (and mutually beneficial as liberals claim), but rather
hierarchical and exploitative.
- The governments of poor countries are usually complicit because the ruling classes in the
periphery also benefit from the system
-
Issue Realism Liberalism Critical theories

Human nature Selfish, unchangeable Cooperative, seeking Variable; largely

mutual gain, progressive
changeable

Central problem Ware and security Encouraging Inequality -- gender

cooperation on global and economic;
issues imperialism

Key actors States; govt and Individuals; MNCs; Classes (for

military penetrated states; marxists); MNCs;
international NGOs; govts
institutions; NGOs

Motives of actors Power; national Rational self interest; Power; greed;

interest; security peace; prosperity liberation; justice

Nature of Anarchy; economic Interdependent; Hierarchy;

international politics growth will not economic growth will dominance; resistance
overcome state promote peace to hegemony
conflicts (including
intellectual)

Outlook for the Pessimistic; perhaps Optimistic; progress Pessimistic, unless

future stability; states will is possible; economic structural (material
pursue neo- growth is good for and/or ideational)
mercantilist policies all; institutions help change is achieved

Neo-Gramscians; another marcist variant

 - Antonio Gramsci (1891-1937) argued that a form of socioeconomic hegemony exists within
states and societies that serves to reinforce the capitalist order controlled by rich elites
- ‘Neo-Gramscians’ (like Stephen Gill) emphasize the influence of hegemonic ideas and
institutions in a global hegemonic system
- This differs from the realist concept of hegemony as military-focused
- The instruments of this hegemony include (liberal or classical) economic theory and practice, the
media, social organizations, and government propaganda designed to socialize the masses
- This is to convince the masses that their lives are better off under capitalism; and that they should
aspire to imitate the upper classes in order to live the good life—a life most will never achieve

According to neo-Gramscians and neoMarxists, dominant states and elite capitalist centres in the world
economy have ensured that the development of global politics protects their wealth – not only with guns
and warships – but also with the spread of capitalist ideology and aspirations. For a neoGramscian,
perhaps no better example of this is the idea that globalization will be good for all, and not just for a
select few

Convergence: A liberal, globalize dream

- More people enjoy higher standards of living than at any time in human history
- World trade and financial flows have increased dramatically over the past 150 years
- Regions are economically integrated to an unprecedented degree (especially in Europe and North
America, and increasingly in east Asia)
- Countless free trade agreements between states
- The WTO has 164 members today
- Friedman’s The World is Flat suggests that the removal of barriers to competition have
been—and still are—the key to further economic and thus human development

Divergence: Nasty, poor, brutish and short

- The gap between rich and poor countries has been widening since 1945
- Monetary crises
- Frustrating trade disputes
- Potential rise of exclusionary trade blocs and protectionism
- Imbalanced investment flows (largely between the Global North)
- Vast difference in life experience of low-income people from those of economic elites with this
gap involving the quality of life, health, education and general standard of living
- Collier’s The Bottom Billion – a new concerted approach to poverty, and globalization is actually
making the situation in these countries worse; he suggests preferential trade policies and the
elimination of corruption

Some more stats: a vastly unequal world

- In 2010, developed countries account for 64% of world GDP
- GDP per capita in developed countries was 11 times higher than average GDP per capita
income in low-income countries
- In 2012, if we were to divide global income in half, the richest 8% of the world’s population
would take one-half, while the other 92% would take the other half
 - If we were to divide it into fifths, the richest 1.7% of the world population would take
1/5, while the poorest 75% would take ⅕
- A person in the top 1% of the world’s population was 2000x richer than a person in the bottom
half of the world’s population
- 2008: World Bank estimated that the richest 10% of the world’s population was responsible for
almost 60% of world consumption, while the poorest 10% was responsible for less than 1%
Comparison: Two diff world

Canada Niger

HDI (Human Development Index – HDI rank of 186th

measures life expectancy, educational
attainment, and income per capita)
ranked 6th out of 190 countries

High life expectancy of 81 years Low life expectancy of 54.7 years

Literacy rate over 99% Low literacy rate

93.4% primary and secondary school Primary and secondary school enrolment
enrolment rate of 31.3%

GDP per capita of $34,600 GDP per capita of only $US626

A lot of inequality – within states, too

- Gini coefficient measures inequality within a country
- The higher the # the more unequal

Crises always hit the poor hardest: The global recession of the late 2000s only exacerbated this disparity,
as the poorest countries suffered the worst drops in economic growth and living standards. One can
expect a similar rise in inequality following the Covid-19 pandemic.

- Neo-Marxists see the spread of world capitalism – as defined by a system that protects wealth and
capital while disciplining labour in globally organized modes of production – as attempting to
serve the interests of transnational economic elite.
- The social impact of globalized mass production, cash-crop agriculture, and exploitation of cheap
labour has led to increased calls for alternative economic approaches

Feminist IR scholarship
- Feminist scholars seek to expose the ways in which power, inequality, and injustice are gendered,
seeking to describe the nature of the patriarchal (maledominated) systems that perpetuate the
marginalization and oppression of women
- Systematic discrimination against women is common in many countries, as seen in various
aspects, such as:
- Relative lack of women in senior government positions, on the boards of MNCs, and in
the leadership of major international institutions as evidence
 - Women own very little land worldwide, have lower pay and incomes, and possess a very
small share of societal private wealth
- Women also face high levels of sexual violence and often form a disproportionate share
of refugee populations
- Mainstream IR, especially realism, perpetuates the cult of masculinity through concepts like
militarism, anarchy, the balance of power, and the emphasis on the state, which enforces and
perpetuates patriarchy
- Realism has also served to diminish the importance of issues of special relevance to women, such
as human rights, health care, family planning, education, and development

Women under globalization: more work, more exploitation

- Women do more work than men
- More women participate now in the formal workforce than ever before:
- 1997-2007, 200 million women joined the global labour force, an increase over 18%; in
2007, there were 1.2 billion women in paid work (vs 1.8 bn men)
- But women are more concentrated in informal, subsistence and vulnerable employment than men
- Women are more vulnerable bc their job can be taken by men easily
- Agriculture, clothing industry are mostly by women in global south
- on average, women earn 17% less than men global
- About 60 to 90% of the labour-intensive component of the production of agriculture and clothing
(textiles) in the developing world is done by women; also outsourced corporate services like call
centres
- The proliferation of export processing zones (EPZs) -- special territorial enclaves created
by governments for industrial and trade activity by domestic and international
corporations exempt from national labour and environmental laws
- Millions of women work in over 3000 EPZs in over 120 countries worldwide, and
therefore fall outside the jurisdiction of whatever minimal labour rights for women might
exist in the host country
- Women are considered desirable workers in such industries because they can often be extended
fewer benefits and paid lower wages, are considered less likely to form unions and cannot find
better work due to discrimination

Women in the informal sector

- Feminist scholars argue that the work many women do has been systematically undervalued in
society and by employers and governments; also, much of it violates domestic and/or
international labour and human rights laws
- Face many other challenges, too: the increasing trend toward the outsourcing or subcontracting of
work to home labourers (‘informal’ work) leaves women highly vulnerable to poverty and
abusive working conditions
- Women grow much of the food consumed locally in most societies and care for children and
elderly in addition to paid work
- Global trafficking in women (especially for the large international sex trade) is a fixture of the
contemporary global economy and is characterized by kidnapping, deception, and brutal coercion
The rise and (controversial) role of MNCs
- The rapid and far-reaching influence of MNCs may be the most remarkable characteristic of the
contemporary global economy
- What are they? MNCs are businesses with extensive investments or operations in more than one
country
- Typically MNCs are headquartered in a home country, and own and operate affiliate businesses
(subsidiaries) in other countries around the world
- Larger MNCs may control large product lines and brand names, acquired through strategic
corporate alliances, mergers, purchases of other companies, or hostile takeovers
- World production has become increasingly globalized largely because and through the operations
of MNCs, as production facilities have been constructed and/or relocated overseas and product
components are assembled in a wide variety of countries
- MNCs also cooperate extensively, often sharing production facilities and forming partnerships
with local firms

The power of MNCs: some data

- MNCs are extremely powerful economic entities; their significance in the global economy has
grown as world trade has expanded
- ´ In 2009, there were over 82,000 MNCs worldwide with over 807,000 affiliates (often
called subsidiaries)
- MNCs account for a tenth of world GDP and one-third of world exports
- When compared with the GDP of states, more than 1/3 of the world’s largest economic
units are MNCs
- Over 45 of the largest MNCs have annual revenues over $100bn (vs UN regular budget is
about $1.9bn
- Toyota has manufacturing facilities in 27 countries and employs about 326,000
people
- ´Some MNCs have a large number of subsidiary corporations, e.g. Yum! Brands
owns A&W, Pizza Hut, Taco Bell, Kentucky Fried Chicken, etc, operating
37,000 restaurants in 117 countries

- A world of states – and a world of MNCs MNCs have a great deal of control over the global
capacity to manufacture products, sell services, and provide finance, and they are leading
developers of technology and services
- Most of the largest MNCs are in the manufacturing sector (Toyota, VW), oil (ExxonMobil,
RoyalDutch Shell), electronics and IT (Apple, IBM), banking (ICBC, Bank of America,
Citigroup, JP Morgan Chase) and services (McDonald’s, Walmart, Amazon)

Do MNCs exploit low income countries? Yes.

1. MNCs decapitalize less-developed countries (LDCs). MNCs take more money in profit out of
LDCs than they invest back in them
2. MNCS are obstacles to social progress. The profit motive makes MNCs unresponsive or opposed
to progressive political change.
 3. MNCs contribute to inequality. MNCs create an elite socioeconomic class in LDCs, isolated from
the poor majority.
4. MNCs discourage indigenous/local development. They oppose efforts by LDCs to industrialize,
as this would create domestic competition.
5. MNCs create dependence, LDCs economies come to depend on MNCs for investment,
technology, and markets
6. MNCs use LDCs as sources of raw materials. MNCs extract raw materials for a low price and
manufacture products abroad, forcing LDCs to purchase expensive finished products.

Do MNCs exploit low income countries? No.

1. MNCs provide investment to the host country and also attract foreign investors to that country
2. MNCs support (and need) stable and peaceful domestic environments, and therefore have an
interest in long-term stability.
3. MNCs create jobs, train locals and have an interest in a capable workforce
4. MNCs promote development of the host country, help create modern infrastructure and share
technology, therefore creating conditions conducive to domestic growth
5. MNCs increase fiscal resources of the host country, as MNCs pay taxes and royalties to LDC
governments
6. MNCs help the host-country access products from abroad as well as export markets