Wolf vs. Wade

In "Incensed about Inequality", Martin Wolf pushes a pro-globalization perspective which proposes that the trends of globalization over the past twenty years have reduced inequality and poverty. His focus rests mainly on Asia, particularly India and China, to demonstrate his claims. He argues that the rapid growth these two nations have experienced profoundly affects the incidence of both inequality among individuals, and world poverty. He uses measurements of GDP per head to assert his claim that living standards in these countries are sharply increasing. He goes on to describe the recent surges in economic growth in a number of other, mostly Asian, countries, and furthermore, declares that their success was a direct result of embracing the principles and practices of a neoliberal capitalist market economy.

Wolf uses population-weighted measures of wealth and equality to claim that while  average incomes between the rich and poor nations are widening, inequality between countries is dropping, when weighted by population. He contends that thanks to the fast growth of major Asian countries, inequality among individuals is also falling. He also says that poverty has become far less widespread than in the past, now only afflicting less than 25% of the world population. Again, he cites growth as the reason for this reduction. Finally, he demonstrates that poverty is decreasing by mentioning several indicators of improved living standards: longer life expectancy, lower infant mortality rates, higher literacy rates, and reduction in fertility; while claiming that food production is growing at a faster rate than the population.

Robert Hunter Wade's article, "Is Globalization Reducing Poverty and Inequality?" sharply contradicts Wolf's. He immediately points out that the arguments about declining poverty are distinctly neoliberally-biased, especially when suggesting that further trade liberalization is the solution for the developing world to be successful.  He also notes that these claims about declining inequality as a result of globalization support the deregulation rationale of the World Bank, the World Trade Organization, and the International Monetary Fund. He points out the opposing perspective, called "anti-globalization" or "anti-neoliberal", which believes that inequality and poverty have been growing; and that both camps propose their opinions as factual.

Wade contends that despite huge growth trends in several developing nations like China, that these growth spurts do very little to close the enormous gaps between wealthy and impoverished nations, "testimony to the failure of 'catch-up'." He then criticizes the evidence many neoliberal pro-globalizers use for their argument, data from the World Bank. He shows that the figures put forth by the World Bank not only have a wide margin of error, but that those errors may indeed bias the results in a direction favorable to the World Bank's interests. He cites several errors and biases in the study which indicate that it severely underestimates accurate levels of poverty, especially in relation to the enormous population explosion.

He goes on to demonstrate how different means of measuring poverty and inequality skew the results in different directions. He quickly deconstructs several arguments which make it appear that poverty and inequality have declined in the past two decades. While China and India, accounting for 38% of the human population, significantly affect the results of these studies, Wade comes to the conclusion that even with their extreme growth spurts, that world inequality is most likely still rising. Absolute income gaps continue to widen. He agrees that the proportion of the planet living in absolute poverty may have dropped, but that any further claim is going out on a limb. Inequality may be falling in a few select nations like China, but overall, there is no unbiased evidence to make this conclusion solid, and it cannot be generalized to the rest of the world. In fact, many reliable studies show opposite trends.

I had a very difficult time understanding the details of Wolf's and Wade's arguments because of their economic and statistical nature. Wolf's article seems to be particularly ideological, written from a distinctly neoliberal, pro-globalization camp. Wade's seems less intensely biased, and more skeptical of the globalist claim that asserts globalization to be reducing poverty and inequality. I am personally far more willing to agree with Wade because his arguments seem far less partial to a particular ideology, and support what I have seen in the world as both a student and a traveller. Wolf seems very adamant to push a strongly neoliberal, globalist perspective that suggests further liberalization of world markets will only improve human life by reducing poverty and inequality. On the other hand, Wade's skeptical response easily deconstructs Wolf's arguments, with far more evidence to the contrary. I suspect that poverty and especially inequality are definitely rising worldwide - certainly, the handful of wealthy nations and their richest citizens are becoming wealthier, but this does nothing to help the extreme poverty evident in the majority of the world. From what I have learned, it seems that globalization involves world domination by superpowers and giant transnational corporations; the inability of small/poor nations to compete in an integrated market; exploitation of the developing world and the natural environment; sweatshop labor and human trafficking, etc.

Article Discussion #4: "From One Earth to One World"

This 1987 report published by the World Commission on Environment and Development discusses the basic ideas of environmentalism and sustainable development. The Commission operates with the belief that despite the severity of modern economic and environmental crises, that the future can bring about both the eradication of poverty and the salvation of our suffering planet. However, for this positive future scenario to be successful, it hinges entirely on responsible political action.

One can assess positive changes in the world such as lengthening life expectancies and growing literacy rates; yet these successes of development have been created by unsustainable processes. The authors of this report divide these problems into development failures and environmental-management failures. For example, despite development processes, the gap between rich and poor peoples and nations continues to expand, not shrink. Industrialization, development, and economic prosperity have come at the expense of the planet, with life-threatening problems ranging from resource depletion to desertification to the "greenhouse effect". These problems affect not only ecosystems, plants, and animals, but also human survival.

However, these economic and environmental problems cannot be compartmentalized as separate phenomena. They are inextricably interwoven in a vicious cycle: unsustainable development destroys the environment, and a dying environment impedes development. Poverty can be analyzed as both a contribution to, and a result of, environmental degradation. Hence, environmental problems cannot be resolved without addressing wider issues of inequality. The World Commission on Environment and Development has conducted vast amounts of research that suggest that current development processes and techniques are both maintaining/increasing poverty and murdering the natural environment. Sustainable development is crucial not only for "developing" nations, but also for the industrialized world.

Three major crises have traditionally been examined in recent decades: environmental, developmental, and energy - yet, these crises are in fact all one in the same. Population growth is out of control, particularly in the developing world, putting unbearable pressure on natural resources. The global economy has also reached unprecedented heights, but by using raw materials from nature which cannot be regenerated. Humanity is not only rapidly depleting much-needed resources but also polluting the environment beyond repair. The worst of this two-fold planetary destruction occurs in the developing world - which is least able to manage its environment responsibly due to desperate poverty.

Humanity must concern itself not only with economic impacts on the environment, but also with the impact of environmental dissolution upon the economy. With globalization, foreign nations are not just becoming more and more economically interdependent, but also more ecologically interdependent. The two factors cannot be extracted from one another. Environmental and financial mismanagement have ripple effects that resonate around the planet. The industrialized world both dominates international policy and consumes the majority of the world's resources. Thus, inequality is the root of both the development and environmental crises.

Poor countries in the developing world are stuck in a "Catch-22" in which they are forced to exploit their environments in order to develop, sell exports, and repay debts - yet this destruction of the environment prevents prosperity. The poor are forced to overuse their environmental resources, and the governments of developing nations are helpless to protect the environment in their desperate quest for development. Additionally, environmental degradation leads to social unrest, while an obscene proportion of budgets are spent on "security" and military expenses. Rather than addressing issues of poverty, inequality, and ecological destruction which lead to social unrest, governments are wasting money on planet-obliterating defense technologies like nuclear weapons. Even if the planet and its people can survive with these lifestyle patterns for a short period of time, future generations will be helpless when we have used every resource and destroyed every ecosystem. This is inevitable unless we adopt sustainable development.

Sustainable development means that we must be responsible about our consumption  of resources, our sociopolitical organization, and our impact on the natural environment. Policies and practices must be not only environmentally friendly, but humanitarian, because poverty must be eliminated in order to prevent the destruction of our planet and the misery of humankind. Political will must ensure economic growth in poor nations, equal access to resources and the benefits of development, and the opportunity for democratic participation to be equitable. Wealthy nations must be conscious and responsible about their consumption and pollution. Population control is also a vital element of sustainable development. Humanity must continuously evolve its behavior to account for both present realities and future needs.

I really enjoyed this article and found it highly informative and enlightening. I was only vaguely familiar with the concept of "sustainable development" prior to reading this. This article clarified both the reasons why we need sustainable development, and some of the details as to how it might be achieved. I never previously realized how deeply interconnected environmental and economic issues were. Without being overtly complex, this report gave me a clearer "big picture" of world issues related to development, environmental concerns, and economics. I had the impression that ideas about sustainable development were far more modern, and was surprised to learn that this report was published in 1987. It seems to me that it was almost "before its time", yet over twenty years later, we are still faced with the same, worsening problems discussed in this article, and far too few people know about sustainable development or have the power to implement it. I do agree with the World Commission on Environment and Development that it is entirely possible to implement sustainable development and thus improve our treatment of nature, secure a healthy planet for future generations, and  ameliorate economic inequality. However, I have limited faith in the governments and intergovernmental bodies responsible for its implementation, and fear that over twenty years since this report was published, that we are running out of time and the possibility of saving this world is quickly dwindling.

Article Discussion #2: S. Strange: "The Declining Authority of States"

Susan Strange argues in her article "The Declining Authority of States" that in the end of the twentieth century, there has been a global phenomenon in which nation-states have significantly lost a great deal of power over domestic affairs and markets. She believes that the average citizen can probably be better trusted on the affairs of state than the politicians, and that previously held scholarly assumptions and theories about politics, economics, and international relations must be reconsidered in the current age of globalization. Some of the concepts that must be reexamined are 1) the limitations of politics, 2) the nature of power in society and where it comes from, 3) how necessary it is to have authority in a market economy, and 4) the nature of the international community and how state actors behave within it.

Strange proposes the theory that due to the integration of world markets and their liberalization in the post-war period, the forces of those markets have become more dominant and powerful than the nation-states which are meant to control the economy. Not only has the market become the dominant power in society, but states have also diffused a great deal of power to other institutions and to local and regional organizations. Ironically, at the same time, it might appear to the average civilian that state authority in the private life of citizens is growing. However, contempt and disillusionment with this idea further contributes to the decline of state authority.

"The need for a political authority of some kind, legitimated either by coercive force or by popular consent, or more often by a combination of the two, is the fundamental reason for the state's existence", Strange writes, but she claims that many states are lacking these necessities.

Another paradox she explains is that while many industrialized nations are losing authority, there is a growing collection of ethnic nations that are vying for statehood. Yet those that achieve it are only granted symbolic power, while international markets retain the real authority which governments cannot control. Strange also cites another argument that might be used against her claim: the success of Asian states which have used state control over the economy to prosper and develop. However, she argues that these states were very lucky, and hence exceptions to the rule. Eventually, Strange believes that the Asian states will also fall victim to the international political economy and pressures to liberalize their markets, and then their states will lose authority as well.

Technology and its accelerating advancement and expansion is one major factor Strange believes has been overlooked in examinations of the current international political economy, especially in the aspect of the military. She points out that post-Cold War, two ideas about nuclear technology have changed in ways that drastically alter politics. For one, most fears of nuclear destruction have been calmed. But secondly, the possibility of nuclear warfare and destruction of the planet has become something uncontrollable by state power. It may or may not ever happen, but there's not much any state government can do to stop it. One of the most basic responsibilities of the state is defense, and if technology undermines that capacity, then the necessity of state authority becomes far less imperative.

Another area Strange believes has been neglected in current studies is that of states' financial alliances with transnational corporations. TNCs can invest in states and benefit from the development of new technology - but the drive for ever-better technology raises the economic stakes. As long as states can enjoy the investment of TNCs without suffering the majority of the costs, there will be such alliances. The obsession with technological improvement and its expense has made money all the more valuable in the international economy. Markets have become more important and more powerful in determining international relations that governments are, and this is often overlooked by modern scholars.

Strange postulates three major premises. 1) Political activity is not restricted solely to political officials. 2) Markets have become the impersonal, indirect authority over political outcomes. 3) Power over both societies and economies is exercised by, and acknowledged to be in the hands of, non-state actors. Domestic sovereignty can no longer be safely assumed to be controlled by the nation-state. Major technological and financial changes, along with the integration of global markets, has severely weakened the authority of governments. Additionally, many states are becoming powerless to fulfill their responsibilities, but there is nothing to take up the slack for them - neither intergovernmental institutions nor a major hegemonic power is there to fill the gaps. The state governments' diffusion of power has left a major lack of authority.

I find it difficult to formulate an opinion on this article because it raises more questions than reactions for me.

- If it is true that states are losing authority to market forces, then what is going to happen to domestic and international affairs? Will social politics and military actions ultimately be dictated by the market? Can economic forces be deciding factors for every kind of political decision?

- Even if citizens' faith in their state governments is waning, won't they still expect and demand the institution of government authority? Most people would probably prefer a powerless government over anarchy.

- What will market control over political affairs mean for the average citizen? If all priorities are determined by a global capitalist economy, what will happen to non-financial political decisions? If social welfare is neglected completely for the sake of "the market", will citizens rebel against a system that denies their needs?

- In the event of total domination of political affairs by the global capitalist market, will governments start trying to prevent their loss of power? Will regional and intergovernmental bodies grow or diminish? Who will take over when Strange's concepts "non-authority" or "ungovernance" become real and evident to the wider population?

Article Discussion #1: Wallerstein

Immanuel Wallerstein's article "The Modern World-System as a Capitalist World-Economy" describes how the globalization of economic forces has been happening since the sixteenth century, despite the common notion that it is a very recent phenomenon. Not only has the global economic structure been integrated across borders for hundreds of years, but it has also been a capitalist system for just as long.

The two main factors that characterize the modern world system as capitalist are the division of labor and the priority for a infinite accumulation of wealth above all else. Wallerstein argues that not only is capitalism the only world economic structure that has survived for a significant length of time, but it is also conversely dependent on a world structure to be successful. Capitalism needs the political advantage of multiple different states to work with, but also the enormous market provided by a global system. While many argue for the benefits of total deregulation and the "invisible hand" of the free market, Wallerstein says that capitalism needs a mostly, but not entirely, free market to succeed. Were the market completely free, profit would cease to be endless.

The world capitalist system in fact relies on state regulations such as patents, protectionist measures, state subsidies, and tax benefits, to be as successful as it is. States also serve as large-scale consumers of goods and services.

Wallerstein goes on to discuss the concept of unequal exchange in the capitalist world system, which is founded upon the idea of "core-periphery". Basically, there are core production processes, which are quasi-monopolistic and profit the most, and periphery production processes, which are genuinely competitive and thus less profitable; allowing for a continuous flow of capital from periphery to core. In the modern world system, this manifests into core states and peripheral states who take on differing roles of production. However, there is constant shifting among these elements because monopoly is self-liquidating; thus, core producers eventually become peripheral.

Politically, strong states tend to have more core production processes and will act to protect quasi-monopolies, while weaker states containing a disproportionate amount of peripheral processes, are usually powerless to change the division of labor that allots them a peripheral role. There also exist semiperipheral states, which occupy a very difficult position sandwiched between pressure from core states and attempts not to become peripheral states.

Wallerstein claims that due to the natural capitalist rhythm of  core monopolies dissolving into peripheral production, the world economy is cyclical in nature. It will continuously alternate between economic expansion and surges in prosperity; and then a slowing down that results in recession and lower wealth.

It's hard for me to formulate an opinion on this article because it is rather abstract economic information, but it was very valuable to my understanding of how capitalism functions in the modern world system. I am one to view things from a humanitarian perspective, so my interest in this issue is how the capitalist world system, especially in relation to core and peripheral states, affects citizens of those states. What I see in the capitalist world system is exploitation of the developing world in the Global South to further privilege the already wealthy states in the North. The mostly deregulated free market translates into an unrestricted domination of wealthy, industrialized nations over the rest of the world. Even though in some ways the world capitalist system benefits developing nations by stimulating economies and providing employment, it is a system dependent upon keeping them impoverished so that the elite handful of rich nations can prosper beyond all limits. In my opinion, it is disgraceful at best that a minority of the global population accumulates endless wealth and luxury, while the vast majority suffer in unspeakable poverty without the basic necessities of survival.