A Path Toward Economic Globalization Mutation

Running head: A PATH TOWARD ECONOMIC GLOBALIZATION MUTATION 1

A path toward economic globalization mutation

Armen Álvarez

Norwich University

Author note

Armen Álvarez, Department of Diplomacy, Norwich University

This research is part of Economics and the International System

Seminar GD 530 week 5 required assignment

Seminar Instructor: Amit Mukherjee

July 7, 2013

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Abstract

Nation-States look beyond their geographical borders to interact with other nation-States to achieve mutually beneficial arrangements that promote healthy economies. These benefits are based on relative nature natural resources and social prosperity. In this research, I examine economic theories of capitalism, Marxism and protectionism—international policy trends practiced by nation-States of greater influence in the global world—as these theories have influenced the current trend of global capitalism. The following questions are addressed: How is it that absolute economic freedom can regulate the political economy of a nation-State? How is it possible to ensure that the measures are fair and that they benefit nation-States that have fewer resources and skills to compete in a field where all the advantages accrue to the hegemonic nation-State? In conclusion, global capitalism has faced some obstacles, which may result in changes that will allow a new global economic trend to emerge that will allow States to retain their own identities while promoting a world economic government.

Key words: globalization, liberalism, realism, Marxism, socialism, superpower, capitalism, protectionism, Cold War nations-states.

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A path toward economic globalization mutation

The global economy today is dominated by the enormous concentration of power in financial markets dominated by currency speculation, where profitability is high. Therefore, increasingly, the distribution of income in the world responds to virtual transactions in the financial sector. This is the clearest manifestation of a reality that is imposed and that can well be called global capitalism, the basis of a future global system of power. The role of the nation-State in this new political design is a cause for concern, since it will depend on the distribution of the income generated in the production systems of each nation-State. Economic theory helps explain the process that has pushed societies into capitalism, but globalization offers a new twist. The reflections contained in the pages that follow indicate that globalization will continue to mutate and will depend on the economic actors influencing the configuration of the new and increasingly entrenched power structure.

Economic liberalism-capitalism

Economic liberalism fights against the absolutist political economic system, as well as the mercantilist theories advocating regulation of the economy by the State. According to Cewonka (2009), higher education available to all makes possible greater economic freedom by offering the masses the economic knowledge that only business professionals and traders had previously .

The so-called doctrine of laissez-faire filled a stage of thinking and economic activity. Under this doctrine, the role of the State is reduced to defending the freedom of independent economic activity against any political regulation. How is it that this absolute economic

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freedom can regulate the political economy of a nation-State?—by the law of supply and demand that classical liberals considered a natural law, the same to those that regulate the cycle of the seasons or gravity. The laws of the market, based on supply and demand, are the invisible hands that rule the world economy and balance production and consumption. Put in more modern terms, the State should be limited to maintaining order and enforcing contracts that parties sign freely. No other laws should be enacted to interfere with economic freedom.

After the Second World War and during the Cold War, the ideology of economic liberalism favored the industrialization process, the creation of global markets, the accumulation of capital, and the emergence of extremely large corporations. All these dimensions are reflected in the second phase of the Industrial Revolution, but this ethos separated the ethics of economics from the savagery of the social problems of industrialization.

Economic Marxism-socialism

The Marxist-socialist system was born with the purpose of reorganizing society as a reaction to the social inequalities existing in capitalism. Karl Marx provided the theory, and Vladimir Lenin the practice. This system was intended to facilitate a better distribution of wealth, leading to a more just and egalitarian society. The Communist Party of the Union of Soviet Socialist Republics, in a 1961 declaration, declared that communism is (1) a social system without classes, in which the means of production are state-owned; (2) a system of social equality; (3) a system that bases production on the constant development of science

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and technology; and (4) governs by the principle “from each according to his ability, to each according to their needs .”

According to Kennedy (1987), after the Second World War in other countries, socialism was a way to organize the State, society and the economy on the principles of equality and solidarity, aiming to put an end to the exploitation of individual by individual. As practiced by the Soviet state, the system failed. Marxism was good in theory, but had serious flaws in practice. Individuals pursue self-interest where space is made for a natural order that is not controlled by the government that quashes the opportunity of establishing a democratic process. Change in the part of the world controlled by Soviet communism and key players in the global economy have

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