Global Inequality And How To Fight It (I)

It is a matter of very global fact that the world has witnessed since the end of the Cold War 1.0 during the last 30 years an increasing number of extremely rich people compared to ever seen before in history. To illustrate the case, at the beginning of the 21st century there were 573 billionaires in the world among them almost 2/3 (308) just in the USA, 114 in Europe, 88 in Asia, etc. Their combined wealth in mid-2000 was greater than the total gross national products (GNP) of 1/3 of the world’s population according to the calculation by World Bank.

At the beginning of the current century, the richest individual in the world was Bill Gates (Microsoft Corporation’s founder). He became a personification of the spirit of the business in the contemporary turbo-globalization economy: a computer nerd turned capitalist whose software provides the operating system for almost all personal computers. Further, for instance, in 2004, among the top 40 richest individuals and families in the world have been 16 from North America, 15 from Europe together with Russia, 6 from the Middle East, 2 from Hong Kong (PRC), and 1 from Mexico.

The issue is that turbo-globalization after 1990, tremendously increased economic, cultural, social, and political global interconnectedness, created the opportunities for unthinkable up to that time personal and family wealth. The list of the wealthiest people around the world shows that majority of them could describe their riches as a kind of new business wealth but rapidly made during the lifetime of a single person. Some of those richest people are such for the reason of inherited wealth which became passed down from one generation to the next. Typical examples of the world’s richest persons who can exemplify such kind of new business wealth are Roman Abramovich and Bill Gates among few others. It has to be clearly noticed that both of these multi-billionaires have been born into relatively modest backgrounds in their respective countries before starting unimaginable economic success and both of them directly benefited from the process of turbo-globalization. The first did it by buying up sections of the Russian oil industry in the 1990s at the time of the Western puppets at the power in Moscow Boris Yeltsin and the liberals as Russia sold its nationalized industries on the global market. The second did it by his involvement with some of the new information and communication technologies that drive turbo-globalization.

It is obvious that the benefits of turbo-globalization are uneven, and are not enjoyed by all across the globe. Billions of workers are being drawn into the global labor force, many working in oppressive conditions that would be unacceptable under Western employment regulations, such as, for instance, minimum wage. Some countries found engagement in the global economy after the Cold War as China or Russia but some did not like North Korea. It is true that Western post-industrial societies mostly profited from turbo-globalization while Africa became the chief loser (except RSA). In general, just as we can speak about rich and poor persons of a certain state, we can talk as well as about rich and poor people or states across the globe.

Global inequality 1The global inequality from 1990 onward is one of the most striking social features of the post-Cold War world. Economic inequality is only one feature of global social inequalities but probably the most important and problematic. Other features of inequality are, for instance, of status like those inequalities associated with stigmatization and exclusion on different levels. We do not have the right to forgetting that the world is as well characterized by enormous inequalities of power, especially in those cases of authoritarian regimes. Such inequality based on power exists both between the states in global politics and within a single state.

How to measure inequality within a global economy?  

Global economic inequality refers in the first place to the systematic differences in wealth, incomes, and working conditions which are existing between the countries across the globe but primarily on the North-South relations.  However, those differences between countries are present together with differences within countries that today, even the richest states have growing numbers of poor people. On other hand, less wealthy states are creating many of the richest individuals (super-rich) from the global perspective.

From 1945 onward, nations came together to find some ways to reduce inequality but primarily its fundamental negative feature – poverty. The solution was agreed to solve the problem by fostering global economic growth. Several concepts of global justice underpin international inequality-reduction strategies by giving focus to approaches that are seeking to enhance the rights of the marginalized nations in the global South. However, the level to which such efforts became successful is extremely debatable in academic circles but, nevertheless, states attempted to address the challenges of global inequality in several different ways.

In principle, there are several ways of classification the countries in terms of global inequality. One of them is to compare their economic productivity and one (but not only) important measure is Gross Domestic Product (GDP). What is GDP? The GDP of a certain country is made up of all recorded produced goods and services within the country in a particular year. However, it has to be noticed that GDP does not deal with income earned abroad by either individuals or corporations. Nevertheless, another important measure is Gross National Income (GDI) or Gross National Product (GNP). Unlike GDP, GNI/GDP includes income earned by both individuals and corporations outside the country. Another issue is that the measures of economic activity (GDP or GNI/GNP) are in many cases given per person and, therefore, this is allowing to compare the wealth of an average inhabitant of a country. But, for the purpose to compare different countries, it is needed to be used a common currency for comparison. In that matter, the World Bank and most other international institutions use the US dollar – $.

We can here use the official data by the World Bank that is an internationally leading institution providing loans for development projects in not properly developed countries and it uses per person GNI/GNP in order to classify states into three categories as high-income, middle-income (can be composed by upper-middle-income and low-middle-income), and low-income. Nevertheless, such a classification system can be useful for the purpose to understand why exists such vast differences in living standards between states across the globe.

High-income states

The high-income states are from the most general viewpoint those countries that have been the first to be industrialized and today their economy and society are living in the post-industrialized era. The process of industrialization took some last 250 years starting in England with a Great Industrial Revolution and later spreading to Europe from West to East, the USA, and Canada. It became only around 50 years ago that Japan joined the ranks of high-income state, while Singapore, Hong Kong, and Taiwan moved to this category in the 1990s.

Richest and poorestHowever, high-income states are covering only 15% of the global population yet lay claim to some 79% of the global annual output of wealth at the very beginning of the 21st century according to data by the World Bank. One of the features of the high-income states and societies is that they can offer satisfied housing, adequate food, drinkable water followed by other comforts which do not exist in many states and their provinces in the world. It is not any secret fact that these states often have even large numbers of poor people (like the USA) but on other hand, most of their citizens and inhabitants can enjoy a living standard that is unimaginable by the majority of the people across the globe especially by those who are living in low-income states.

Middle-income states

The middle-income states are, basically, located in parts of Asia (East and South-East), the oil-rich states of the Middle East and North Africa, the Americas, and the once states of a real-socialism that made the former USSR and its satellites from East Europe. The biggest number of the states which belong to this category are the countries that started to be industrialized relatively late (compared to the West), basically in the 20th century and consequently, they are not yet as industrially developed and wealthy if we compare them with the high-income countries.

Global inequality 2However, the ex-Soviet republics (today independent states), on the other hand, are highly industrialized but their real living standard is eroded since 1990 when the (wild) capitalist economy started to function. For instance, according to a CIA report in 2000, in Russia, the wages in the 1990s of ordinary citizens dropped down around 1/3, while retirement pensions dropped around 50%. A similar situation was in all other East European states of the former Soviet bloc.

At the beginning of the 21st century, the middle-income states included some 45% of the total global population but accounted for only 18% of the wealth produced in the same year. Another feature is that many middle-income states’ people are visibly better off compared to the people in low-income countries, but, in fact, most of them are not enjoying any kind of similarity of the living standard of those people living in the high-income states. According to the World Bank, the membership of the middle-income states in the world expanded since 2000 as China with 22% of the global population became re-classified from the status of low- to middle-income states as a direct consequence of Chinese rapid economic growth since the reforms from 1978 onward. Even though such re-classifications can be somewhat misleading, China’s GDP per capita is not too much higher than GDP per capita (average) for most developed countries coming from the group of low-income states. Besides, according to the report by the World Bank, a vast majority of China’s population, in fact, is in the low-income category.

Low-income states

The low-income states are covering the biggest portion of Africa, a big number of East, South, and South-East Asian countries, some countries from East and South-East Europe, and several states in Central America and the Caribbean region. The focal part of the economic structure of such states is agriculture and all of them started the process of industrialization far beyond the high-income countries and recently compared to middle-income countries. There are, of course, several political, social, and economic reasons for their late industrialization and huge poverty.

Nevertheless, at the beginning of this century, the low-income states have been including around 40% of the global population but participating only with 3% of the global output of wealth per year. But the most striking and warring fact is that such inequality has a clear tendency of increasing. One of the crucial features and, in fact, social, problems for the majority number of the low-income states is the fact that fertility in these states is much higher compared to other states especially those coming from the high-income group. Also, in low-income states, large families are providing group farm labor force or contributing to the family income by other labor means. However, in post-industrial high-income states, children are usually attending school classes rather than working on the farms and, therefore, the economic benefit coming from large families is declining or simply does not exist at all. This is one (not crucial) reason that people in high-income societies tend to have fewer children. Consequently, according to the World Bank, the population of low-income states is averagely growing some three times or faster compared to high-income states. However, in a big number of the countries coming from the low-income group, people are constantly struggling with poverty, malnutrition, and in some cases (Ethiopia, Somalia) with starvation. Another feature of the law-income states is that most people live in the countryside but this feature is fast-changing as millions of people are under the move to huge, densely populated cities and even megalopolises where they are living in poor housing conditions.

Poverty as a global problem 

Poverty together with wealth can be found side by side in the majority of the world’s nations. Simply, both are two global dimensions that are interrelated as they affect each other and influence both the willingness and state’s capacity to ensure a stable global system. Most Governments, international organizations, and Westerners adhere to the traditional concept of poverty which refers to a situation in which the people do not have the financial resources to buy adequate food and satisfy other basic human needs. Such people are usually understood as either unemployed or underemployed. Such a traditional viewpoint about poverty based on financial resources is a product of the globalization of the Western cultural values followed by the continuous expansion of the market economy around the globe. Basically, poverty is understood primarily as an economic condition dependent on money’s transactions in the market.

M1235D2_Global_Inequalities_FINAL_500KBThere are different conceptions of poverty that underpin both the mainstream and alternative points of view about global or national development. In essence, the fundamental agreement about the material aspect of poverty exists like shortage of food, drinking water, or sanitation conditions. However, disagreements exist about the importance of non-material aspects of poverty and how material needs have to be met with regard to the proclaimed goals of development.

Poverty is very much regarded as characteristic of the Third World with a gendered aspect. Nevertheless, many contemporary researchers on the issue of poverty as a subject of global politics for reflection in International Relations (IR) created an idea around global justice that considers what states owe each other in the matters of international cooperation. More precisely, those states with the power and ability to help have both a moral and ethical obligation to try and solve problems of global poverty. In other words, in the context of global poverty, the moral and ethic requirements are that the First World nations as most developed and richest should assist as an obligation poor nations from the Third World for two crucial reasons: 1) as they can do that with minimal effort, and 2) the obligation of most developed nations to help annihilation poverty is founded on the fact that they are very often implicated in the creation of the conditions in which poverty can exists.

Poverty exists and due to a coercive global order which includes international organizations of governance like the World Bank or the International Monetary Fund. Such organizations are imposing disadvantages on the Third World nations of the global South and at the same time reinforce a context of poverty what practically means that both the First World nations and international multilateral organizations contribute to the existence and even fostering of the poverty on the global level due to the way in which they have been composed and the system of international order in which they are functioning. Such facts indicate that global problems as global poverty and inequality are to be solved only by global solutions which the First World nations have both a moral and strategic responsibility to address.

To be continued

Reposts are welcomed with the reference to ORIENTAL REVIEW.
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