Global Inequality and Poverty

1. Global Inequality and Poverty

2. GLOBALIZATION • A lot of questions and debates • 3 basic meanings: • 1. Development of a global market economy, in which goods, capitals, services move freely, driven by the profit motive • 2. Development of the global civil society • 3. The growth of international organizations • All three imply the extraordinary growth of interconnections between societies, economies, people across state borders • All three imply challenges to the sovereignty of the nation-state, its ability to act

3. Robbie Robertson*: • Globalization started 500 years ago, an essential feature of the development of capitalism • 3 waves: • Since 1500s – Geographic discoveries, growth of international trade • Ended at the end of the 18th century • Since 1800s – Industrialization, British hegemony • Ended with the start of World War I • Since 1945 – Institutionalization, key role of the US, post-industrialism, the information revolution • *Robbie Robertson, The Three Waves of Globalization. A History of a Developing Global Consciousness. L.: Zed Books, 2003

4. Globalization is much more than the growth of global markets or power strategies pursued by some forces which have a global reach • It is a process of development of the human civilization leading to the rise of global society • “Anti-globalization” is a misnomer • Because these protesters are part of globalization themselves • At issue is the struggle over the terms of globalization, over the shape of the world order

5. The Third Wave: • US-led efforts to create an international order • Politically: democracy, rule of law, peaceful resolution of disputes (The United Nations) • Economically, a set of institutions to rebuild a growing world economy in which mutual economic interests would make wars less likely (the Bretton-Woods System) • Late 1960s-early 1970: the notion of interdependence of nations – growth of interests and concerns shared on a global scale • “The global village”

6. After the end of the Cold War, • globalization was presented as a progressive, positive force binding humanity together, opening up great opportunities for progress everywhere, etc. • Peace, cooperation, and prosperity instead of war, impoverishment, and radical revolutions • The real record is a far cry from this utopia

7. Institutions of economic globalization • The IFIs – they make and maintain the rules • Parallel development: the rise of the TNCs, the institutional core of the global market economy • Many states pursued socialist-type reforms • Success in saving and reviving capitalism • 1950s-early 1970s: “The Golden Age” • Late 1970s: • the shift to the neoliberal model (The Washington Consensus)

8. Neoliberal economic reforms (“Structural adjustment policies”, “Shock therapy”) • Implemented: • first in the less developed countries of the Global South, • then in post-communist states of Eastern Europe and Eurasia, • then in Western countries • 3 main components designed to reduce the role of the state and free up market forces: • Liberalization • Stabilization • Privatization

9. Average annual growth rate of world GDP: • 4.9 percent between 1950 and 1973 • 3.0 percent between 1973 and 1992 • 2.7 percent between 1990 and 2001 Average ratio of real interest rate to GDP growth rate in the seven leading capitalist economies: • 0.97 between 1881 and 1913 • 2.40 between 1919 and 1939 • 0.36 between 1946 and 1958 • 0.55 between 1959 and 1971 • 0.47 between 1972 and 1984 • 2.34 between 1985 and 1997

10. Percentage share of national income Human Development Report 2001, UN Development Program

11. The world’s population: 3 classes Upper class: 11% (real income higher than the average income in Italy) Middle class: 11% (real income between the average income in Italy and the poverty line, adjusted for purchasing power) The poor: 78% (real income below the poverty line) See Branko Milanovic, True World Income Distribution, 1988 and 1993: First Calculations Based on Household Surveys Alone. Economic Journal, Jan.2002 2.8 bln. people live on less than $2 a day The richest1% of the world’s people receive as much income as the poorest57% (UN Human Development Report 2002, Overview, p.2) World’s 3 richest people have assets greater than 48 poorestcountries combined

12. Inequality on a global scale The gap in living standards between the richest and poorest nations: 1820: 3 to 1 1913: 11 to 1 1950: 35 to 1 2002: 70 to 1 See Jeremy Seabrook, The No-Nonsense Guide to Class, Caste and Hierarchies. Toronto: New Internationalist Publications, 2002, p.77

13. Global trends in development: • HDR - Statistics - Get Data - Human development in animation

14. UN Human Development Report 2002: “Economically, politically and technologically, the world has never seemed more free – or more unjust” (p.1) “Advancing human development requires governance that is democratic both in form and in substance” 

15. UN Millennium Development Goals, adopted in 2000: • 1. Eradicate extreme poverty and hunger • 2. Achieve universal primary education • 3. Promote gender equality and empower women • 4. Reduce child mortality • 5. Improve maternal health • 6. Combat HIV/AIDS, malaria, and other diseases • 7. Ensure environmental sustainability • 8. Develop a global partnership for development