GLOBALIZATION OF CAPITALISM

Capitalism, also known as the free-enterprise or free-market system, is the economic structure
that permits people to use their private property however they see fit, with minimal interference
from the government. Under capitalism, people are free to work at jobs of their own choosing, to
try to sell their products or services at whatever prices they wish, and to select from among
various product- and service-providers for the best value.
It should be noted that "pure" capitalism, unencumbered in any way by government, eists
neither in the United !tates nor anywhere else in the world. "oreover, the capitalist system of
present-day #merica differs in significant ways from other capitalist systems around the globe,
just as it differs from the capitalism that eisted in the U.!. at the turn of the $%th century. &hile
private-property rights and certain amounts of economic freedom have always been part of
#merican life since that time, those rights and freedoms have become increasingly weighted
down by heavy governmental regulation.
Critics of capitalism believe it is imprudent to allow an unregulated market to run its course, and
to permit private citi'ens to make their own economic decisions based on self-interest. #sserting
that such systems are inherently chaotic and inefficient, these critics propose that government
regulators and bureaucrats -- "eperts" presumably unencumbered by the greed or the impulse
for self-interest that motivates private citi'ens -- should be empowered to "manage" economies
authoritatively. In response to these positions, the (udwig von "ises Institute scholar )obert *.
"urphy writes+
",his view is flawed in two major respects. -irst it is impossible for a central authority to plan an
economy. .ew technologies /if entrepreneurs have freedom to create new technologies0, changes
in consumer taste /if consumers have freedom to pursue their tastes0, and innumerable variables
that can affect production, distribution, and consumption of everything from newspapers to
lawnmowers on national or international scale are simply not 1manageable1 in the way socialist
planners like to think they are. !econd, the planning bias completely misunderstands the role of
profit and loss in a market economy. -ar from being arbitrary, a company1s 1bottom line1
indicates whether an entrepreneur is doing what makes sense+ if his product is one that people
want and if he is using his resources in the best possible way."
*erhaps the most common objection to capitalism is the "arist claim that it eploits the poor in
order to serve the interests of the rich. 2istory shows, however, that this is precisely the
antithesis of the truth. In pre-capitalist, medieval 3urope, for eample, most people either toiled
in the fields to which they were bound or they worked at crafts that were heavily regulated by
various guilds. ,he aristocracy, meanwhile, ac4uired a virtual monopoly on luury goods.
,he rise of modern capitalism changed all this. ,he fortunes of the big businessmen who
emerged under capitalism no longer depended upon the patronage of a few wealthy clients.
)ather, these entrepreneurs began catering to the needs and desires of a newly empowered
working class consisting of millions of people. 5y meeting those needs and desires, businessmen
greatly increased their own wealth and influence. In the first days of the Industrial )evolution,
workers were abused. 6et they organi'ed into unions that protected their interests and changed
capitalism itself, pressuring it to evolve from its early eploitative model to a more humane one.
#s a result, capitalism helped improve the lives of people in every social stratum. -or eample,
the transition into the capitalist era brought a dramatic decrease in infant-mortality rates and a
significant rise in life epectancy. "oreover, the average blue-collar worker under capitalism
was far wealthier than the 7bosses8 of socialist economies.
#fter the 5olshevik revolution of 9:9;, communist true-believers epected that their system
would offer the average person a better standard of living than capitalism ever could. 5ut the
working classes in the United !tates lived far better under capitalism than their counterparts in
the !oviet Union under communism, most of whom were subjected to impotence and
immiseration. &herever communism was tried, it resulted not only in economic deprivation but
also in political tyranny and oppression. "oreover, it brought about an immense wealth disparity
between the common people on the one hand, and government authorities and their bureaucratic
operatives /the nomenklatura0 on the other.
.otwithstanding this historical track record, modern-day &estern intellectual elites continue to
despise capitalism, blaming it for virtually every social ill that can be identified. Indeed,
feminists blame capitalism for the ine4uitable treatment to which women were historically
subjected. Civil rights leaders blame capitalism for having created the psychological conditions
and the economic incentives that made the slave trade and racial discrimination possible.
3nvironmentalists blame free-market industrial pursuits for poisoning the air and water, and for
triggering the "climate change" that allegedly threatens the well-being of every form of life on
earth. *eace activists blame war on greedy capitalists and their insatiable thirst for wealth and
empire. Consumer-advocacy groups allege that capitalism encourages business to put "profits
over people," and thus to be inattentive to the needs and the safety of consumers. #nd moralists
decry the commerciali'ation associated with capitalism.
<lobali'ation refers to the worldwide phenomenon of increased technological, economic, and
cultural interconnectedness between nations. It is essentially capitalism on a global, rather than a
national, scale. In a globali'ed economy, economic activity is unrestricted by time 'ones or
national boundaries. ,here is an international echange of labor forces, ideas, knowledge,
products, and services. ,his trend has accelerated dramatically since the 9:=%s, as technological
advances /most notably the rise of the Internet and advances in telecommunications
infrastructure0 have made it easier for people to travel, communicate, and do business
internationally.
,he epansion of international trade and foreign investment was sparked not only by
technological progress, but also by two major sociopolitical developments of the 9:=%s. >ne of
these was the collapse of global communism. ,he fall of the 5erlin &all and the subse4uent
dissolution of the !oviet empire freed some ?%% million people from the shackles of closed,
centrally commanded economic systems. ,he second development was the demise of the ,hird
&orld@s reliance upon import substitution -- a trade and economic policy founded on the idea
that a developing country can increase its wealth by importing as few goods as possible and
relying instead on locally produced substitutes. &hen import substitution proved to be a colossal
failure, struggling countries all over the world -- starting with Chile in the mid-9:;%s and China
later that decade -- began opening their markets and welcoming foreign investment.
>pponents of globali'ation characteri'e the phenomenon as a form of &estern epansionism and
cultural imperialism, claiming that it will merely increase the opportunities for wealthier nations
/and their multinational corporations0 to take advantage of poorer ones. ,his happens, the critics
say, because multinational corporations can eploit the cheap labor and la regulations typical of
developing countries where there are no labor unions. 5elieving, despite overwhelming evidence
to the contrary, that a planned economy ensures the greatest economic benefit to the poor, the
anti-globali'ation movement tends to favor socialism over capitalism. It also warns that
globali'ation could eradicate regional diversity and lead to a homogeni'ed world culture where
7native8 cultures are swallowed up by &estern traditions.
!upporters of globali'ation respond by pointing out that since the 9:=%s, every nation that has
eperienced an increase in its manufacturing output has also seen its per capita income riseA that
nations open to trade tend to be much more prosperous than nations with closed economiesA and
that the increased wages spawned by globali'ation correlate with reduced poverty and improved
living conditions for all. ,he most impressive gains in this regard have been reali'ed in 3ast
#sia.
,he two most prominent pro-globali'ation entities today are the &orld ,rade >rgani'ation and
the &orld 3conomic -orum. ,he former, consisting of 9?? members, was created to establish a
set of rules to govern global trade through the process of member consensus. ,he latter is a
private foundation that does not possess decision-making power but is a powerful networking
forum for many of the world@s business, government, and not-profit leaders.