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Globalization and Social Inequality

| March 14, 2015

Social inequality is an issue that is much debated today within the social sciences, as well as other disciplines. Although very few would deny that social inequality exists and has always existed in human societies, it is not always clear through what mechanisms it manifests itself, along what lines it progresses, and how we can make life better for those affected by global inequalities. The question remains whether or not the world that we live in today is more equal than what people have experienced in the past. Although some might argue that Western development brings with it more equal rights, it is doubtful that this is actually the case. In recent years, we have witnessed a phenomenon called globalization which is, in short, a “widening and deepening of the international flows of trade, capital, technology and information within a single integrated global market (Petras and Veltmeyer 2001, p11).” Globalization has brought with it significant changes in the way people and nations relate to one another. In many cases, it has created new patterns of inequality, as well as reinforced old ones. The purpose of this paper is to investigate some of the effects of globalization and critically analyse them. I will argue that currently we do not live in a more equal world and neither are we moving towards greater equality. Rather, I argue that, through globalization, inequalities are exacerbated due to capitalism and the unequal flow of markets. This paper will look at how inequalities have evolved over the last two hundred years, why they have occurred, and how the pattern of inequality looks like today.
Kaplinsky (2005, p 28) and Jolly (2005) note that as early as 1776, economists such as Adam Smith became preoccupied with the issue of poverty and its consequences on inequality. During the 18th and the 19th century in England it was well-known that for every handful of rich aristocrats there were hundreds or even thousands of poor people. With the advance of industrialization, poverty only deepened (Jolly 2005). Karl Marx illustrated the problem perfectly by outlining the issue of the bourgeoisie owning the means of production, while workers sell their labour for minimal wages. Petras and Veltmeyer (2001, p 128) also stress that historically, a minority ruling class have used coercion and social institutions to control exploited people. Until the present day, this situation has not changed very much. Moreover, during the past decades, the disparities between the global North and South have become more and more evident, partly due to globalization. The movement of capital and trading agreements have mostly benefitted the developed countries, while the developing ones are forced to create economies that cater to the needs of the West. As Birdsall (2005, p 2) notes, “global markets are inherently disequalizing, making rising inequality in developing countries more rather than less likely.” This shows that we are not moving towards a more equal world. Moreover, even wealthy countries, such as the U.S. experience growing poverty rates within their own borders (Dillon 2010). Dillon (2010, p 60) stresses that “economic inequality has in fact grown since the late 1980s, as has the gap between the highest and the lowest income groups,” while Butler and Watt (2007, p 112) even call poverty rates in the U.S. “extreme.” It is evident from these accounts that unfortunately, unless measures will be taken, inequality will increase and dreams of an equal world are moving farther away.

The reality is that we live in an unequal world. There is an abundance of social issues that are caused by widespread inequality. Discrimination today manifests itself through the lines of class, gender, race, age, nationality, and other factors. Due to length limitations, this paper mostly focuses on economic inequalities. These are especially poignant when we look at the way people live in underdeveloped countries. This is a direct consequence of colonialism and the quest of the Western world to expand and develop their economic system. However, the expansion of the markets rewards only those who have more assets, such as financial and human capital (Birdsall 2005, p 3). Also, poor nations cannot attract investment and diversification, without a stable middle class and economic institutions. Consequently, the price of their exports declines and they fail to grow (Birdsall 2005, p 3). This is just an example of how globalization reinforces inequality. If markets are let to operate freely, as they do today, the world will become more unequal. Underdeveloped countries have not become more equal since interaction with the West has intensified. Beer and Boswell (2002, p 31) also stress that “disproportionate control over host economies by transnational corporations increases inequality by altering the development patterns of these nations.” Although some might think that international corporations can improve a developing country’s economy, this is not necessarily true. It is evident then, that the path that is nowadays advocated by many here in the Western world, does not serve the purpose of a more equal world. On the contrary, it exacerbates global inequalities.
The causes of growing inequality in today’s world are diverse and often not very easy to identify. However, the main cause might be the capitalist system that has spread internationally, oftentimes to the benefit of few and the exploitation of many. Trade between rich and poor nations creates patterns of dependency and unequal exchanges, leading to high income inequalities between the two (Beer and Boswell 2002, p 33). Despite the current emphasis on trade agreements and flows of trade that increasingly deepen, time and time again it has been stressed that this process creates inequalities and is detrimental to developing countries. In addition, the markets often fail. Some notable examples are the financial crises in Mexico, Thailand, Korea, Russian, Brazil and Argentina that took place in the 1990s (Birdsall 2005). Also, when a recession hits, the lower classes are the most affected. In turn, this leads to even greater inequalities between the rich and the poor.
There are many mechanisms through which capital and the markets contribute to a less equal world in our present time. Investment often causes disparities between foreign and domestic sectors. Also, international corporations usually do not reinvest profits in the local economies. Governments in developing countries adopt policies that prevent the lower classes from moving upwards, while at the same time they encourage the formation of a “managerial elite (Beer and Boswell 2002, p 33).” For those concerned about equality, it is alarming that neither foreign investors nor local governments fully understand the consequences of their actions. If this kind of policies will keep being implemented, levels of inequality will certainly increase. As Petras and Veltmeyer (2001) note, the politics of the Western Right are also at fault for the direction towards which we are heading. They say that the Right engages in “class warfare” through privatization and the concentration of power in the hands of few (Petras and Veltmeyer 2001, p 148). Thus, social institutions, as well as economic policies serve the interests of wealthy corporations. The focus of present neoliberal politics is not to decrease income disparities, but to increase the wealth of the few. Staying on the same course guarantees that the world will become less and less equal.
I have argued that we do not live in a more equal world. On the contrary, the globalization of markets has had a negative impact on the livelihoods of many. The effects of capitalism had started being seen a long time ago. Income disparities always existed between those who own the means of production (the bourgeoisie) and the workers that work in their factories. The income gap between the lower class and the upper class increased steadily with time. In addition, global exploration and colonization has led to even greater disparities between the West and the colonies. Under the current system, developing countries find it almost impossible to reach the same level of wealth and stability as Western countries. However, even developed countries have growing poverty rates within their own borders. These rates have been increasing over the past years, while the gap between the rich and the poor is widening. The world is becoming a less equal place. The free flow of markets and an unregulated capitalist system are mainly to blame for income inequalities. Poor nations have become dependent on rich nations and economic crises affect lower classes the most. With both corporations and national governments driven by profit, no one looks at the long-term effects that trade has on inequality. Moreover, the rise of neoliberal politics in the West encourages the maintenance of the same pattern of increased inequality and dependency. Despite the optimism of some, the truth is that globalization, as it is occurring today, is only increasing disparities between classes, between nations, and between the global North and South. The evidence shows that the world is at least as unequal as it was two hundred years ago. Current economic policies will only serve to make it less and less equal. If drastic measures are not taken soon, there is little hope that our world will become a more equitable place.


Butler, T. and Watt, P. 2007. Understanding Social Inequality. London: Sage.
Beer, L. and Boswell, T. 2002. The resilience of dependency effects in explaining income inequality in the global economy: a cross national analysis, 1975-1995. Journal of World Systems Research, 8(1), pp.30-61.
Birdsall, N. 2006. Rising inequality in the new global economy. International Journal of Development Issues, 5(1), pp.1-9.
Dillon, M. 2010. Introduction to Sociological Theory: Theorists, concepts and their applicability to the twenty-first century. Chichester: Wiley-Blackwell.
Jolly, R. 2005. Global inequality in historical perspective. WIDER (World Institute for Development Economic Research) Angle, 2.
Kaplinski, R. 2005. Globalization, Poverty and Inequality: Between a Rock and a Hard Place. Cambridge: Polity.

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