by Josef A

Created on: May 20, 2009   Last Updated: May 25, 2009

Who profits from globalization should better be framed differently and the better question would be who profits from global capitalism. Globalization itself is neither a system nor is it any kind of ideology. It is merely a process. A process of constantly growing global interconnections of most aspects of our life. Naturally, this process goes along with increasing uniformity, but that is more a cultural question and there are no individual winners or losers, more a loss of cultural diversity affecting everybody. The most discussed issue is, however, the economic dimension of globalization.

As proposed at the beginning, for understanding the effects of globalization it is essential to understand the effects of capitalism. People seem to have forgotten the negative sides of capitalism. Nobody is entirely satisfied with the system we live in, but people who want to turn over the system and abolish capitalism are considered radical and are by far the minority. That has not always been like that. In the 19th century during the industrial revolution, capitalism first showed its ugly face. Workers were heavily exploited and the weak and sick stayed behind. Ideas like communism and socialism were widespread. Governments in the Western world reacted to that threat and most countries modeled their own model of capitalism, including many socialist elements easing the harsh effects of pure capitalism. Strong unions and federal legislation guaranteeing certain minimum rights to workers are the main pillars the concept of social justice is built on. Although the U.S. is known for being more capitalistic than others, it is a far cry from the circumstances and conditions of the industrial revolution.

The problem with globalization is now that it has become increasingly difficult for individual countries to maintain and uphold their mix of socialism and capitalism. International competition undermines the social protection that worker movements achieved in a long struggle. The following example illustrates this point. American workers now directly compete with their Chinese counterparts, the latter working for a fraction of the U.S. wages. This happens to a larger extent with work that does not require much education. Such work is mainly manual work performed in the industrial sector. As a consequence, there are basically only two options: the wages in those segments of the economy can either go down or the American companies go out of business. In the end U.S. workers may be protected by law and unionization, but their jobs are gone.

So who loses? Clearly, the weak, the poor, the sick, and particularly the uneducated. Who wins? People who are highly qualified and individuals who are already wealthy, because in its purest form, capitalism is much more profitable for the capital owners as history has shown. Opponents and critics of globalization, in case they propose a solution (most just oppose and criticize), often want to turn back time and close markets in a protectionist way. That is certainly an option, but then the biggest winners of globalization are not benefiting from globalization anymore: the American consumers. Only globalization provides American markets with an abundance of cheap electronics, food, and many other consumption goods.

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