THERE IS NO ALTERNATIVE? The rise of global capitalism
Globalisation According to Anthony Giddens (1990, p.64), globalisation involves: “the intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa�
Globalisation is an evolving process, not a thing that has happened
Our progress
We have considered how global social structures are challenging local identifications
We examined the development of a global media system
Is the nation state still relevant?
Do we hear more voices or fewer in the global sphere?
We discussed whether we are becoming more or less similar?
How does this impact your family and your cultural identity?
From individual to collective
The predominant attitude of the young in Western societies is of increasing acceptance of individual expression – ‘be who you want to be’
This individualism has led to greater acceptance of, and rights for, minority identities and lifestyles
Conversely, the societal expression of individualism is consumerism and a resigned attitude to collective change
Over the next three weeks we will consider the social consequences of our individual actions, asking what capacity we have to enact change
The essays 1. Critically evaluate the impact of the expansion of capitalism on the global poor
2. To what extent should developing nations be forced to reduce their carbon emissions? 3. Using examples from contemporary London, discuss the extent to which the ‘world city’ promotes post-national cultural identities 4. What is meant by ‘the end of history?’ Is this term still relevant in the 21st century? 1500 words, worth 70%, due Monday April 13th, 3pm
Today
An introduction to the dynamics of capitalism
Globalisation as global capitalism
The global dominance of the logic of capitalism
The rise, shame and fall of financial capitalism
Rising global and local inequality
To what extent does global capitalism work primarily for the wealthiest?
Do you feel any responsibility for global poverty and/or climate change ?
What is economics?
Capitalism, and economics, can often seem very abstract
Economics concerns the material reproduction of our lives
Material reproduction is the ways in which we organise our lives in order to eat, drink and reproduce our societies
There is no ‘natural’ way to materially reproduce our society
The currently dominant system is ‘capitalism’
What is capital(ism)?
Capitalism is the social system in which capital is accumulated
Capital is money deployed to buy commodities in order to sell them for more money
This money can be accumulated to become more capital, which is then reinvested to make more money
This is the cycle of capitalism – a successful capitalist economy will continually expand
The cycle of capital Commodities Money
Money II
Commodities
The corporation
Corporations, those who control capital, are privately owned, whether by individuals or by shareholders
The primary purpose of a corporation is to make profit for the owners
All business decisions should be taken with this in mind
A corporate community
Corporations now dominate our lives
Our economies require both corporate investment and continuing corporate profit
Corporations demand favourable tax and employment laws
What is good for corporations is thought to be ‘good’ for society
Corporate values have seeped into everyday parts of our lives
The professional sport business…
Is owned privately by individuals
Has a primary purpose of accumulating profit
Sport is the product to be sold to consumers
Sporting decisions become business decisions
Club culture becomes brand value
Sportspeople become employees
Do sports teams ever feel like businesses to you?
Corporate universities
As university fees have risen, students are becoming more concerned with their employment prospects
In response, universities are becoming more concerned with ‘employability’
Rather than being a ‘public good’, universities are focusing on the demands of employers
Are you concerned about finding a job after graduation?
What about globalisation?
Globalisation and global capitalism have developed concurrently
The major trends of globalisation have matched the expansion of capitalism Imperial
trade and colonisation The development of global economic institutions The emergence of transnational corporations Electronic communication and financial trading
Globalisation as global capitalism
Capitalism is naturally expansive
In order to find places to invest money, the owners of capital are always searching for new markets and new consumers
Going in search of these markets, capitalism has expanded across the world through multi-national companies and global economic reform
In turn, capitalist expansion has created a shared culture of corporate values
Inherently global In The Communist Manifesto, Karl Marx argued that:
“The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere�
Instituting Capitalism
After the catastrophe of World War II, new global economic institutions were established
These institutions, the International Monetary Fund (IMF) and World Bank, were established at the ‘Bretton Woods’ conference of 1944
These institutions attempted to create global economic stability by establishing a shared economic framework
Global economic ideas
The IMF seeks to manage the world economy by ensuring a predictable economic system
Whilst it mainly seeks to advise, it also makes loans – with strong conditions that enforce economic policy upon poorer nations
Decisions are made by votes, but votes are based on financial contributions
The US has 16.75% of the vote, the UK 4.29% and China has 3.65%
The United States also has veto control of the World Bank
Being transnational
The most visible aspect of global capitalism are transnational corporations
Transnational corporations do not have a specific ‘home’ location
The development of transnational corporations (TNCs) has been a significant element of globalisation as power moves beyond the reach of the nation-state
Source: The Economist, 2012
What transnational corporations involved in your life?
The power of the TNC
TNC’s bring Foreign Direct Investment (FDI) to national economies, which compete for these funds
These companies have come to dominate capitalism and drive globalisation
Whilst this can distribute wealth globally, many TNCs have become immensely wealthy and powerful
Corporate control
Researchers at the University of Zurich found that there are 43,060 transnational corporations
Of this 1,318 companies dominant the global market
147 of these companies, mostly banks, control 40% of the wealth
These companies are intensely interconnected, often owning parts of other companies and leaving the system vulnerable to collapse
Problematic control
Because of this power they are often able to dictate political conditions in host countries
Countries are finding it increasingly difficult to gather tax from transnational corporations
In 2012 Starbucks made a loss of £30million in the UK, despite doing £414 million in sales
The size of these corporations has also lead to wealth accumulating in an increasingly narrow range of individuals
Material reproduction within a particular locality is conducted by and for the benefit of those with no stake in that locality
The rise of finance capital
Since the 1990s the global economy has become increasingly ‘financialised’
Rather than being orientated around trade of goods and services, advanced economies are dominated by the complex trading of currency
The ‘crisis of accumulation’ of the 1970s meant that capital had to find new ways to make money
Instead of using money to buy commodities, the financial economy uses money to buy money
Source: Spiegel, 2011
You are a banker too!
Any money you have in the bank is a loan to the bank
Banks invest this money into financial markets
They are only required to maintain a small amount of deposits
They make a profit by gaining more from your money than they pay in interest
Are you mad at yourself?
The shame of financial capital
Any commodity can be traded within the financial economy
This includes basic items like food – trading in cereals and rice can greatly increase prices, particularly in famines when supply is low
People might be dying, but profits are rising
The fall of financial capital
Beginning in 2007, a crisis developed in the global banking system from which we have not recovered
Whilst the causes of the crisis are complex, banks had taken such high risks with their debt that when one institution could not pay, others also collapsed
The collapse of the financial sector spread throughout the economy, leaving us wallowing in debt and having to make ‘difficult decisions’
Despite all of this, almost no bankers have been jailed and tax dodging continues
There really is no alternative
Former Prime Minister Margaret Thatcher famously said, ‘There is no alternative’
Whilst the financial crisis showed the weakness of capitalism, it has also made it stronger than ever
Governments were forced to bail out banks to stop the ‘real’ economy from total collapse
Troubled economies are unable to act if it is not supported by the market
Inequality is rising – but there doesn’t seem to be anything we can do about it
The consequences of inequality
Inequality tends to produce greater tension between people, creating crime and decreasing social cohesion
There are also strong effects on health and life expectancies, including factors like obesity and teenage birth rates
Overall societal well-being tends to fall in societies with very high inequality
Why would higher inequality increase the homicide rate?
The global elite
If anything has become globalised it has been an elite class
Both capital, and capitalists, are able to move freely around the world, often owning multiple homes around the world
These bankers, investors and other elites have begun to live in a world quite divorced from the other 99%
Everything can be sourced privately in a ‘bubble’ cut off from regular social reality
This global elite is a noticeable feature of London life
DIY Summary
How has global capitalism impacted upon globalisation?
Critical reflection
Any questions?
Next Week WEEK 8 THE FLAT EARTH HYPOTHESIS: DEVELOPMENT, INEQUALITY AND POVERTY
Core readings: Chapter One, Friedman, T. (2005) The World is Flat: A Brief History of the 21st Century. New York: Farrar, Straus and Giroux.
Millennium Development Goals: http://www.un.org/millenniumgoals/