Challenges and Backlash of Globalization and Global Finance Capitalism

Globalization and Global Finance Capitalism has fostered a flowering of both wealth and technological innovation the like of which the world has never known. This sort of rapid economic, social and cultural mores has challenged traditional business practices, social structures, and cultural mores and environments and as a result has generated a substantial backlash in both the developed and underdeveloped nations. It seems the more markets generate both capital and economic growth for the forces driving globalization and global finance capitalism the more widespread and diverse the disruption. The purpose of this paper is to examine the trajectories of globalization and global finance capitalism, the trends and processes that are alleged to constitute it, and to find out about the challenges and backlash of globalization and global finance capitalism from the perspective of three major sources. In conclusion I shall endeavor to give a critical but objective analysis of globalization and global finance capitalism.

Globalization and global finance capitalism has transformed the globe into a massive economic, social and cultural change over the last two decades. The words globalization and global finance capitalism connotes ideas of laissez-faire on a global scale made up of millions of investors moving money around the world with a click of a mouse. This concept of globalization and global finance capitalism is the heaviest ideological albatross on a global scale the world has experienced. In Promises Not Kept John Isbister sketched an historical oriented analysis of capitalist economic trends both short-term and long-term in the colonies occupied by European imperialism. He injected the long- structural features of the world economy during western European imperialism and capital accumulation. His assertion was that the recent explosion of awareness of transnational, international and global finance and processes is set up in the historical perspective of the last 600 years of the emergence of capitalist inter-societal system in Europe and its Imperialistic expansionism by colonialism, was able to spread capitalism to the whole globe. With similar historical approach, Thomas Friedman in The Lexus and the Olive Tree sketched a similar historical analysis of globalization and global finance capitalism with a parallel distinction.

He divided his historical analysis into two distinctive eras. Friedman described the period from the mid 1800s to the late 1920s as the beginning of the first era of globalization and global finance capitalism. Like Isbister, Friedman asserted, that global finance capitalism was made possible as a result of Western European expansionism of colonies, whose raw materials and source of cheap labor were used to foster industrialization and industrial growth in Europe. According to Friedman’s assertion, the second era of globalization and global finance capitalism came about after the fall of the Berlin Wall in 1989.

The first era globalization and global finance capitalism in comparison to the volume of trade and capital flows across borders, relative to populations, was quite similar to the one we are experiencing today.The successive stream of events which started with the outbreak of World War I, followed by the Bolshevik Revolution in Russia, and then followed by the Great Depression, were all factors which combined fracturing the world physically and ideologically. The world which emerged after World War II was ideologically divided. This ideologically divided world was frozen in place yet in time by what Friedman referred to as yet another international system, which lasted from 1945 to 1989 with the fall of the Berlin Wall. For Friedman, the period after the fall of the Berlin Wall saw the beginning of the current era of globalization and global finance capitalism. Even though, there were a lot of similarities between the two eras of globalizations, there are a lot of distinguishing features between the two eras.

One major difference between the two eras of globalization and global finance capitalism in the aspect of social change process, is the sheer number of people and countries that are able to partake in the current globalization and global finance capitalism is a major if not the major fundamental difference. Many underdeveloped or developing countries that were left out of the first era are now actively involved in the current globalization and global finance capitalism system. One other major process of social change between the two eras of globalization is its cluster of trends of technological innovations built around falling costs, microchips, satellites, fiber optics and the internet, have brought modern information technologies that has enabled the world to be weaved together even tighter. With these modern technological innovations, there was a significant social change in time.

The new technology changed the ways people interact, there movements and variety. This Developmental social change brought about as a result of the new technological innovations was a change within the ongoing communication system which was made possible by space and satellite communication technology. With this new Developmental Social change in technological innovations brought about a variety in the way we communicate. Not just only governments and corporations that has access to the new technologies, but everyone who wishes use this available communication technologies. On a more general level, this development in communication technologies has resulted into a Revolutionary social change, it has replaced the way the developing countries conduct business with the west.

The developing countries don’t just have to trade their raw materials to the west just to get finished products in return; they can now become big-time producers as well. Another major distinction between the two eras of globalization and global finance capitalism is that unlike the first era, the current era with its new technologies has enabled companies to locate different parts of their production, research and marketing in different countries, but still tie them together through computers and teleconferences as though they were in one place. With the combinations of cheap communications, people can now offer and trade services globally, or sell there unique products over the internet.

Although, the telecommunications technologies have contributed to economic and social change in a global scale that is unprecedented in human history and these innovative technologies is making possible for people to trade in places that could never really be traded before, nonetheless, Isbister observed, the lives of the people in the third world are changing, but not improving. He argued, that with the changes of globalization and global finance capitalism, nonetheless, one can find privileged groups, even entire countries and regions, were economic conditions have progressed and were human and political rights are respected. But these are the exceptions, for the reality as Isbister puts it is that most people are desperately poor, and for most people the dreams of a better-life, a more comfortable life security, and human-rights, is just a thing of illusion if not of the too distant future. Gone were the days, when there were two international systems, opposed to each other ideologically. There is only one remaining international system since the fall of the Berlin Wall in 1989.

Unlike the other defunct international system {the cold war system}, globalization and global finance capitalism is a mechanism for a great Significant Developmental change involving the inexorable integration of markets, nation-states and technologies to a degree never witnessed, in ways that is enabling individuals, corporations, and nation-states to reach around the world further, faster, deeper and cheaper than before, and in a way that is producing a powerful backlash from those brutalized of left behind by the system. One other fundamental difference between globalization and other international system is with the spread of the free-market capitalism which reaches virtually every country in the new world.

The more a nation- state let market forces rule the more they open there economy to free trade and competition, the more efficient and flourishing there economy will be. Another aspect of Developmental social change as a result of globalization and global finance capitalism is in the integration of people. The defining technologies have fostered and transformed the way people communicate on a global level. This mew transformation has resulted in the rapid acceleration of the movement of people in a defining demographic pattern, the movement from rural areas and agricultural lifestyles to urban areas, and urban lifestyles were people are more intimately linked with global fashions, food, markets, and entertainment trends.

In terms of defining power structure, globalization and global finance capitalism is much more complex than the cold war system. Unlike the cold war system which was built exclusively around nation-states, and both superpowers acted as balance at the center, globalization and global finance capitalism is built around three balances which overlap and affect one another. The second balance of power structure is the balance between the various nation-states and the global markets. These global markets are made up of millions of investors moving money around with the click of a mouse. These Electronic Herds {Friedman’s terminology}, gathers around key global finance centers such as Wall Street, Hong Kong, London and Frankfurt { Supermarkets, another of Friedman’s terminology}. The third balance in the defining power structure of globalization and global finance capitalism is the balance between individuals and nation-states. Globalization has brought down many walls that limited the movement and reach of the people, has simultaneously wired the world into networks, and has given more powers to individuals to influence both markets and the nation- states than at any time in human history.


The Lexus and the Olive Tree. Thomas Friedman {Globalization in the Context of Social change Chp1}

Promises Not Kept. John Isbister, {Imperialism: Chapter 4}: Structural and Cultural Change. The penetration of modern technology into the third world countries transformed production and increased productivity in agriculture .This increased productivity in agricultural productivity, benefited the people being colonies and the European colonizers but much more so it benefited the European imperialists the most. The agricultural produce was transported back to the imperialists country of origin before being shipped back into the global markets to generate money to maintain the colonies.

The Lexus and the Olive Tree: Understanding Globalization Thomas L. Friedman {The Democratization of Technology Chap. 4 pp45-97}

Promises Not Kept, John Isbister, {Economic Development. Chap 6} Isbister argued that the plight of the third world is not only economic; it is social and political as well. According to Isbister, the promises of technology, of material comfort, of democracy, of human rights, of fairness, of basic respect and decency were not fulfilled in much of the world that came from the shackles of colonialism. He also argued that the international institutions that the rich countries had established, especially the World Bank, began to pay serious attention to the plight of poor countries by the 1960s after Europe had fully recovered from World War II. Isbister also argued that the new attention paid to the third world countries was derived mostly from the cold war competition between the Western and Soviet blocks. The rich countries promised to work together with the poor countries for the economic development of the poor countries was not kept by the rich countries. He argued that for the most part, rich countries are not helpful; they are out-balancing their constructive policies.


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