Lesson 2: Theories of Globalization PDF

UNIT 1- Lesson 2 THOERIES OF GLOBALIZATION At this point, we cannot deny the realities of globalization especially in the period of massive evidences. What makes it more crucial is to understand the concept in the middle of several scholarly debates. Is it really happening? Is it beneficial...

UNIT 1- Lesson 2 THOERIES OF GLOBALIZATION At this point, we cannot deny the realities of globalization especially in the period of massive evidences. What makes it more crucial is to understand the concept in the middle of several scholarly debates. Is it really happening? Is it beneficial to everyone? Does it bring convergence or divergence among countries? The following theories will help us understand globalization from different point of views. A. World System Theory This theory is greatly associated with Immanuel Wallerstein who in 1974 published what is regarded as a seminal paper, The Rise and Future Demise of the World Capitalist System: Concepts for Comparative Analysis. In 1976, Wallerstein published “The Modern World System I: Capitalist Agriculture and the Origins of the European World-Economy in the Sixteenth Century”. This is Wallerstein’s landmark contribution to sociological and historical thought and it triggered numerous reactions, and inspired many others to build on his ideas. World-system theory is a macro sociological perspective that seeks to explain the dynamics of the "capitalist world economy" as a "total social system" (Martinez-Vela, 2001). For Wallerstein, a world-system is a multicultural territorial division of labor in which the production and exchange of goods and materials is important for surviving everyday life. This division of labor is explained as the forces of production of the world economy and the reason for the existence of the two interdependent regions called core and periphery. Both of the regions are culturally and geographically different. One is focused on labor-intensive production, while the other one is focused on capital- intensive production (Goldfrank, 2000). In simple terms, world system theory is a perspective that globalization is essentially the expansion of the capitalist system around the globe. Capitalist system is a political and economic system where trade, industries, and economy in general are dominated by private ownership instead of being state owned. Adding one to what Goldfrank stated as interdependent regions, World system theory is characterized by three interdependent regions: core, semi-periphery and periphery. 1. Core: refers to advanced or highly developed countries/ incorporate higher levels of education, higher salaries and more technology/ generate more wealth in the world economy. Examples: Western Europe, USA, Japan. 2. Semi-periphery: acts as defense zone between core and periphery, and has a mix of the kinds of activities and institutions that exist on them/ may be exploited by the core but in turn exploit the periphery. Examples: China, Ireland, Mexico. 3. Periphery: refers to less developed (Third World) countries, incorporate lower levels of education, lower salaries and less technology/ generate less wealth in the world economy. Examples: Philippines, Vietnam, Africa Semi- Core periphery Periphery Figure 1. World System Theory’s Three Interdependent Regions  The figure above shows the basic idea of the world system theory. It implies the hierarchy of power among the countries in the world. The core countries dominate the economy, exploit the poor peripheral countries, and depend on them in terms of cheap labor and raw materials. The core countries are considered capital intensive while peripheral countries are labor intensive. Semi-peripheral region on the other hand acts as a buffer zone between the two regions. B. World Polity Theory In this perspective, state remains an important component of world society. Societies were becoming more similar in terms of government and policies. This is considered as a response to modernization theory. The expectation that countries will march through the same stages of development. Because while countries differ a lot in their level of development, many aspects of their government look quite similar. Hence, this theory argues that this conformity reflects the existence of a common global culture. World polity theory emphasizes culture not economy and focuses on how culture affects us by providing norms. Norms are unquestionable standards of the society. They are like natural laws where it indicates the proper behavior depending on the situation. Created by man and sanctioned by the society through ostracism (e.g. discrimination, bullying, labeling etc.). In addition to the modernization theory, it implies that all societies start out as traditional economies, then they have an industrial revolution,(a period where economies are dominated by industries and machine manufacturing and countries are becoming urbanized and less agricultural) eventually they become modern, high- technology societies. (Schofer, 2010). This premise is being shown in the figure below. subsistence Industrial modern/ high farming/ revolution technology traditional societies economy Figure 2.llustration of the Modernization Theory While world polity theory envisions a densely interconnected global network, the theory’s dynamic implications are actually stronger. States are becoming more similar as they are integrating more deeply into the world polity, as many studies and hypotheses suggest. C. World Culture Theory This perspective agrees that world culture is new and important, but it is less homogenous than world polity scholars imply. Globalization is a process of relativization. World society consists of a complex set of relationships among multiple units in the global field. It focuses on the way in which participants in the process become conscious of and give meaning to living in the world as a single place. By this, globalization refers both to the compression of the world and the intensification of consciousness of the world as a whole (Lechner, nd). He also added that the structure of world culture works based on the following ideas:  Relativization. This means that each unit emerging in the world order takes shape depending on its surroundings. For example, as nation-states become subject to universal standards derived from a common conception of humankind, citizenship in those societies become relativized. Emulation. Although globalization cannot create a common culture, where everyone has the same values and beliefs, it can create a single arena in which all actors pursue their goals with comparison to others, employing at least some common standards as yardsticks. Glocalization. The ideas and processes inside globalization are interpreted differently according to the point of particular groups and their history. In other cases, this is done strategically, for example when global marketers create local traditions on the assumption that difference sells. Moreover, glocalization captures the way in which heterogenization and homogenization combines. Glocalization is a practice that involves both local and global considerations. Homogenization is the process of making things alike while heterogenization is the process of adoption of elements of global culture to local cultures also known as cultural heterogenization. Homogenization is more on the structural level like the similarities of the architectural layout in all McDonalds branches here and abroad. On the other hand, heterogenization is more on the symbolic level like the way hamburgers and French fries are eaten. While the above discussion highlighted how world culture works, the following shows how it changes. Inherent dynamics of globalization. The world culture theory shows the process as ongoing and open-ended, this means that all characteristic of world culture, discussed above, entails continual change, where cultural conflict is the common mechanism. Movements of de/reglobalization. Globalization triggers resistance or reaction. For example, the Islamic fundamentalism. While against in the form of globalization that builds equal cultures in the world, fundamentalism replace its own global vision. The fundamentalists define global fundamentals and operate in terms of globally dim ideas. Multiple sources. While world culture theory emphasizes the role of reflexivity and worldviews in globalization, in principle change can originate anywhere. World culture theory is causally agnostic. D. Neoliberalism Basically, neoliberalism is a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills characterized by strong private property rights, free markets, and free trade. The concept also suggests its meaning, “revival of liberalism”. From the word “neo” which means new or revived. According to Saad-Filho and Johnston (2005), “we live in the age of neoliberalism”. Along with other scholars, they share the quite common, but not necessarily accurate, view that power and wealth are, to an increasing degree, concentrated within transnational corporations and elite groups, as a result of the practical implementation of an economic and political ideology they identify as “neoliberalism”. On the other hand, Munck (2005), stated that the possibility of a “self-regulating market” is a core assumption in classical liberalism, and an important presumption among neoliberals as well. Efficient allocation of resources is the most important purpose of an economic system, and the most efficient way to allocate resources goes through market mechanisms. This is what Munck describes as “neoliberal economic theories”. For David Harvey (2005), in the existence of neoliberalism, the role of the state is to create and preserve an institutional framework appropriate to such practices. The state has to guarantee the quality and integrity of money. It must set up military defense, police, and legal structures. Furthermore, if markets do not exist, then they must be created. Nevertheless the state should not venture. The state interventions in markets must be kept minimum because, according to the theory, the state cannot possibly possess enough information to second-guess market signals (prices) and because powerful interest groups will inevitably distort and bias state interventions (particularly in democracies) for their own benefit. It was given emphasis in the definitions that the basic characteristics of neoliberalism are free markets and free trade. Figure 3 shows some of the ideas of the free market. Whenever free market exists, price is determined by competition and there is little or no government control. Hence, you are free to choose your work, free to set prices, be an investor, as well as buy, own and sell properties. with little or no This is believed to set free the government creative potential and the control entrepreneurial spirit among people and lead to more individual liberty and well-being. price is In free trade, two or more free to be an Free determined nations agreed to reduce import investor or Market by and export barriers among entrepreneur competition them. If policies were created, goods and services can be bought and sold across international borders with little free to own, or no government control with buy and sell regards to tariffs, quotas and properties subsidies. Perhaps one of the major criticisms about free trade is highlighted in a protectionist’s Figure 3. Characteristics of a free market points of view. Free trade creates strong competition in the international market thereby affecting local or domestic industries. Protectionism refers to actions or policies that allow the government of a country to promote domestic or local producers, and thereby boost its own production of goods and services by imposing tariffs or otherwise limiting foreign goods and services in the marketplace. Aside from the characteristics mentioned in the previous discussion, other characteristics of neoliberalism include open market, tax reforms and privatization (the transfer of state owned properties or businesses to the private sector).Privatization has pros and cons. One reason for privatization is financial constraint on the part of the government. It is expected that after an enterprise has been privatized, it will offer better and quality services among its consumers. On the other side, this may also mean higher price of the product or service being offered. Most privatized businesses in the country offer basic social services. Examples are Philippine Airlines which was privatized in 1992 and PLDT which was privatized in 1995. PAL remains to be the dominant air carrier in the country and is now under PAL holdings owned primarily by business tycoon Lucio Tan.