Table of Contents
The world started to globalize in the 18th century when the capitalist economy began to control most of the states starting from Europe. The market forces which was controlled by the capitalist economy have a significant mutual interdependence with the political ethos as for the trade and production to thrive it have to rely on the security of the state for protection where consecutively the state required trade for the development f its economy. One of the most significant factors the trade offered the states of the 18th century is paying the soldiers who engaged in wars where the element of credit system introduces by the Bank of Scotland thrived the new policy of credits. In the same era, the introduction of different currencies that operated different region made world trade even more integrated as different regions would trade with various currencies who their value was established.
Despite the fact that the world trade contributed much to the development of the global economy, it created some of the concrete problems that it’s unable to solve until now. First, it has not been able to manage and control the financial system as witnesses in the major world economy crises since the 18th century. Secondly, it has been able to protect the environment as the issue of global warming have risen to be a major concern of the environment threat and finally, it fail to balance the social, economic balance as, “balance between the rich and powerful and the poor and weak” failing the capitalist economy of the world (Strange, 1999). This essay, therefore, aims to discuss how global politics has influenced the world regions interactions. The gist of this essay arguments will be whether the failures of the capitalist economy can override its achievements or whether the repercussions are more negative than positive in considering the oppressed economy such as the poor and the powerless states (Mosley 2005).
Globalization is entirely political monopoly of a legitimate system where the power of the world is controlled by distinct states who owns the production power. Susan Strange in her review of The Journal of International Studies refers global politics as a Westphalian system which started in Europe in the mid-17th century going onwards controlling the world trade from one region. In this article, she argues that the control of the Western Europe to the rest of the world have been an ongoing process thus making the capitalist economy fail to address the need for the poor and the powerless states especially the states in the developing countries. She affirm this point by arguing that, “…the extent that the powers of these states over society and over economy grew through the 18th, 19th and 20th centuries, they did so both in response to the political system in which states competed with other states (for territory at first but later for industrial and financial power)..” (Strange, 1999).
Thus it means that if the Western developed nations economy faces some crises, the whole world economy will follow the same struck since they rely on these developed regions such as South and Western Europe. The great market recession of 2008 which was recorded as financial crises of the century not forgetting the global financial crisis of 1929–32 and 1970s have been highly linked to the failure of the capitalist economy from deploying ineffective financial system. Andrew Gamble argued that still though many states showed signs of recovery after the 2008 economic blow, still it “…is not yet clear is the scale of the political and social changes that are likely to ensue from the 2008 crash” where the downturn brought the end of a long sustained world economic growth (Strange, 1999).
Though by the year 2009 some states showed some visible recovery from 2008 financial earthquake, “markets were improving, and bankers’ bonuses were on the rise again,” still the gap between the poor and the rich is evident as, “Unemployment is expected to peak in many countries, including the UK, during 2010.” (Gamble, 2010). This two fact affirms that the confidence that the world economy will not face such huge crises soon in future “since many of the features of the international political economy that gave rise to the crisis in the first place have not been addressed.” (Gamble, 2010). In a nutshell, the policy made by the capitalist economy states rely on the ability to cope with the strategies made. Some of the states such as those in the developing countries have low levels of trade openness than the developed states which impose the imbalance in controlling the world market. Consecutively, the same issue has a bearing in choosing the trade policies whether long term or short term (Frieden et al., 2012).
The need for creation of sustainable development has a greater concern for the protection of the environment. In the begging of the 21st century, a keen interest evolved where the uncontrolled development posed a significant threat to the environment hence the world started to create strategies to conserve the environment. In order to reduce the global warming phenomenal, great concern was imposed on regulating of the carbon emission where each country was given a certain amount of carbon to emit in the atmosphere Gamble, 2010).
In conclusion, in the last two major international political economy crises of the 1930s and 1970s resulted to change of the new frameworks to cater for the previous strategies that failed the world economy. The Keynesianism was established after the 1930s crises which eradicated that the increase of the role of the state to the economy would prevent another crisis. Neo-liberalism was established after the 1970s crises which was like an opposing strategy from the previous Keynesianism of 1930s. Later in the 1990s the development of two approaches that stressed on state failure and market failure have been used to eradicate the economic turbulence. In the 2008 international political economy crises hence could not take either of the two strategies that were implemented after the 1930s and 1970s world economy crises and the emergence of two groups (market fundamentalists and market realist) were seen to heal the new disease. The first argument of market fundamentalists stressed on permitting the crises to take its course without government interference where the second argument involves self-interest of states protecting their citizens. The only solution which is at the public debate now that is seen to have an answer it going back to the old international political economy system that existed before the credit crush. What is seen as the outcome of most of the debate that discusses the failure of the capitalist economies is that radical solution are likely to be adopted rather than creating more capitalist strategies.
- Strange, S. (1999). The westfailure system. Review of International Studies, 25(03), 345-354.
- Mosley, L. (2005). Globalisation and the state: Still room to move?. New Political Economy, 10(3), 355-362.
- Gamble, A. (2010). A new world order? The aftermath of the financial crisis. Political Insight, 1(1), 17-19.
- Frieden, J. A., Pettis, M., Rodrik, D., & Zedillo, E. (2012). After the fall: the future of global cooperation. International Center for Monetary and Banking Studies (ICMB).