Global Income Inequality

Does globalization produce greater wealth differences within and between nations?

Since the implementation of free trade agreements in the 1990s, opponents maintained that free trade agreements favored elites in developing countries, by favoring export economies and imposing neoliberal regulations on the market. The international agreements subjected social democratic economic measures to treaty controls based on narrow trade criteria. The Keynesian policies that were the consensus economics of the 1930s through 1970s, were supplanted by neoliberal free-trade preconceptions.

It is now nearly ten years since the Seattle WTO meeting and anti-corporate globalization protests. With the worsening international economy, debate has revived over the result of the free trade agreements. Many pundits, like the awful Thomas Friedman, still cheerlead whatever changes globalization brings. Academic writers have been a more circumspect, though unsurprisingly, support for free trade is strong in academia as elsewhere. Writing for the online MR Zine, Matthew Thomas Clement discusses some recent reports on globalization, both pro and con:

“Is Rising Global Income Inequality a Myth?”
by Matthew Thomas Clement
MR Zine, August 19, 2008

The second issue of the recently-launched journal Harvard College Economics Review dealt with the topic of economic growth and inequality. In one of the articles, Professor of Sociology at the University of North Carolina François Nielsen (also current editor of the academic journal Social Forces) contends that rising global income inequality is really a myth.1 The fact, he and other authors in the same issue argue, is that income inequality between nations has been declining in recent years, even though income inequality within individual nations has been on the rise. The former trend goes against the conventional criticism of globalization which says that post-World War II economic governance (e.g. the formation of the IMF, World Bank, GATT, etc.) has helped to exploit the peripheral nations of the world, deepening the divide between the rich and the poor.2 However, according to Nielsen, in terms of income inequality, globalization has been much more benign than either university students advocating boycotts of products made in Third World sweatshops or the thousands of people marching in Seattle in 1999 led us to believe. In fact, Nielsen concludes that the “net effect of the new regime of global interactions is a reduction in global inequality” (p. 26).

One of the difficulties in understanding this topic is that writers seem to be moving between discussions of regional inequality and absolute individual inequality without clear referents.

Proponents and some academic observers of globalization tend to look for the regional improvements. Some of the proponents mentioned by Clement have denied that they are defending anything. Sociology Professor Glenn Firebaugh wrote “not to demonstrate that global inequality had declined but, instead, to identify the leading contributors to change in global inequality from 1980-1998.”

Firebaugh’s report is still predicated on an improvement in global inequality since the change he refers to is “the finding of several earlier studies that global income inequality has declined since about 1980.” But while proponents of free-trade can point to information showing regional improvements, income disparity between income brackets within nations may have worsened.

The recent rise in food prices shows how the appearance of prosperity may be belied by facts on the ground. Free trade agreements have benefited production for export in developing nations, and encouraged specialization in agricultural production. As the land is turned over to export crops, and less land is available for growth of diverse sustenance crops, there is a rise in local food cost. This seems to be occurring in Mauritania, for example. At the same time, the profits from export food production are returned not to the small farmers, but to the large landowners.

Critics of corporate globalization seem much more willing to complicate the data on which the presumption of improvement rests. Robert Hunter Wade, a professor at the London School of Economics and Political Science, speaks in terms of probabilities, instead of trends. The implication being, that if the signs trending toward improvement are incorrect, then we should prepare for the bad outcomes.

The implication of Wade and Clement’s argument is the reassertion of politics over seemingly impersonal economic trends: a political adjustment to ensure an end to anti-labor laws, the free passage of people across free-trade borders, the preservation of the environment, the availability of health care, and the quality of life.

This reassertion might mean anything from fair trade and liberal consumerism to syndicalism and the autonomy of producers.

Links:

United States Social Forum: https://www.ussf2007.org/

Americas Social Forum: http://www.forosocialamericas.org/index.php.en

Fair Trade Labeling Organizations International: http://www.fairtrade.net/

Industrial Workers of the World: http://iww.org

UC Atlas of Global Inequality site: http://ucatlas.ucsc.edu/index.php

Are Regions Closing The Gap?

Global Disparities in Income: Are Regions Closing The Gap?

Source: see UC Atlas of Global Inequality site: http://ucatlas.ucsc.edu/index.php

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Posted on August 22, 2008, in economics, political economy and tagged , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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