Each of your responses must be no less than one paragraph.
1. Based on the theories discussed this week, which two (2) theories do you think best explains social inequality?
2. Which main points (from each theory you have chosen), do you think can best be used to explain inequality? Why do you like these theories over the other theories? Explain.
3. After reading the material for this week, to which social class do your really belong? Does your answer prior to reading differ after reading? Discuss what you have learned about social class and how this is determined.
Textbook Readings: Ch3 & Ch4
Repeat Performance: Globalization through Time and Space
In the midst of the lively conversation, the elegant, 90-year-old woman said, “Please excuse me. There’s something I want to share with you.” A moment later she came back with a letter, which she had received at the turn of the twentieth century. The writer was a young Englishman she had met during a transatlantic voyage. He was explaining to his 15-year-old correspondent how exciting it was to be growing up in the nation whose empire stretched around the globe. “What’s particularly impressive,” he wrote, “is that in spite of our modest size, the magnificent phrase still rings true: ‘Rule, Britannia! Rule the waves.’ And that’s going to be the reality for centuries to come.” How strange it felt listening to the young man’s words while realizing that the world’s once dominant nation was now sharply reduced in the course of less than one slender lifetime.
Yes, he was wrong. In fact, as we see with modern world systems, once a nation attains dominance, it is on the brink of decline, and soon a repeat performance makes another nation dominant. In this chapter we examine the development and demise of world systems, which significantly affect citizens’ economic and political opportunities around the planet. Then the focus shifts to global social stratification, with distinctive differences between core nations and the less developed peripheral and semiperipheral countries. Throughout the chapter it is apparent that not only classes but nations themselves vary in access to capital resources. In particular, certain types of capital such as technology and education affect social inequality within countries. The final section indicates how the context of the global age impacts class groups, ranging from the wealthy to the poor.
First, however, it is necessary to place the global age in context.
THE RISE AND FALL OF WORLD SYSTEMS
The past 400 years of human history have featured three time periods in which a single country—Holland (the United Provinces) 1620–72, Great Britain 1815–73, and the United States 1945–67—established hegemony, a situation in which one nation has sufficient power and influence to impose its rules and goals globally in the economic, political, military, diplomatic, and even cultural realms (FineDictionary.com 2017; Wallerstein 1984, 38). The leaders of hegemonic powers prefer to use consensus instead of coercion, but with supremacy in mind, they willingly resort to force. While the height of US hegemonic power has passed, its more than 800 military bases in over 160 countries and territories (Vine 2015), the continuing prominence of large numbers of American-based multinationals, and its well-funded if financially challenged government mean that the country continues to be the major player in the global setting.
In the 1970s and 1980s, Immanuel Wallerstein, Christopher Chase-Dunn, and a number of other scholars concluded that because countries are not isolated but are economically and politically interrelated with many others, then the world system is the most accurate and revealing concept for analyzing the structures and functions of modern nations. The modern world system is a capitalist global economy which contains multiple states and a single dominant international division of labor. When a particular system is fully established, one nation maintains hegemonic control, extending its influence throughout the global entity (Chase-Dunn 1989, 2; Wallerstein 1974, 7; Wallerstein 2011, xiii–xvii). During the history of world systems, nations have varied in their wealth, power, and the roles played.
Per Capita Income1
South Korea (Republic of Korea)
World-system analysts examining the international division of labor divide countries into three types—the core, the semiperipheral, and the peripheral, roughly the rich, the middle income, and the poor. A core nation is a country that possesses a successful industrial history, exerts both political and economic influence in the world system, and enjoys a high standard of living. Besides the traditional core nations featuring the United States, western Europe, and Japan, China has advanced economically, now possessing an impressive portion of the global personal wealth. In 2015 the countries controlling the highest percentage of global personal wealth were in order the United States, China, Japan, UK, Germany, France, and Canada with 41.6, 10.5, 8.9, 5.6, 3.9, 3.5, and 3 percent, respectively (Sherman 2015).
A semiperipheral nation is an independent state that has achieved a moderate level of industrialization and development. In Asia they include South Korea (the Republic of Korea), Singapore, Hong Kong, and Malaysia and, in Latin America, Argentina, Brazil, and Mexico. A peripheral nation is a member of the poorest, least powerful, and least industrially developed set of countries, which are primarily located in Africa, Asia, and Latin America (Bradshaw and Wallace 1996, 44–45; Sherman 2015; Wallerstein 1974). Some descriptions in this chapter cite all three types of nations; in other instances the semiperipheral and peripheral categories are combined as “developing” nations. Table 3.1 illustrates one of the major advantages that the residents of core nations possess—in this instance that they tend to live longer than people in the less affluent nations.
Table 3.1Global Inequality: Per Capita Income and Life Expectancy in Selected Core, Semiperipheral, and Peripheral Countries
1In 2016 US dollars.
Global inequality in income ranges widely. Not surprisingly the data here suggest that people living in more affluent countries have a better chance of living longer.
Sources: World Bank (2016; n.d.).
Across time total income inequality between the core and peripheral countries has widened. In 1820 estimates indicated that the 20 percent of the population living in the richest countries earned three times as much as the residents in the 20 percent poorest countries. In 1870 that ratio rose to 7 to 1, 30 to 1 in 1960, 60 to 1 in 1990, 74 to 1 in 1997, and 83 to 1 in 2007 (Ortiz and Cummins 2011, 2; Pieterse 2002, 3). It is abundantly clear that in contemporary times most workers in the peripheral nations have been increasingly losing out compared to their core-nation counterparts.
Furthermore the relationship between core nations and the other two categories of countries has been exploitative, with the wealthy states seeking two major benefits—raw materials and cheap labor. The raw materials include a variety of minerals and metals essential for manufacturing such products as automobiles, weapons, computers, and a lengthy list of other items. It is safe to say that without these raw materials the core countries’ wealth would be greatly diminished. To obtain raw materials, the European powers established colonies on every continent except Europe.
Representatives of core nations also sought cheap labor, sometimes using slaves. Before the end of the slave trade, 12 million Africans had been captured and transported to an alien, oppressive life in distant, hostile lands. While slaves were used to perform a variety of tasks, the majority of those in the Caribbean, Brazil, and the southern United States labored on sugar, tobacco, and cotton plantations (Bradshaw and Wallace 1996, 45–48; Chirot 1977, 22).
Slavery, of course, is now illegal internationally, and since World War II colonies have proved too costly to maintain, leading to their sovereignty. So is it safe to say that those poor countries are no longer exploited for their raw materials and labor? The answer is decidedly negative, and the key players shaping this modern reality are multinationals, which have developed in the context of modern world systems. A multinational is a large corporation which both produces and sells goods or services in various countries. Profit and a desire for free, unrestricted business activity determine the global choices, including decisions about contracts with feeder (supplier) factories, which manufacture goods for the multinationals. In the third stage of the world-systems process, multinationals have attained massive wealth and power. Walmart, the giant retail-store chain with 67.7 million employees worldwide, led the Fortune Global list of top 500 companies with a $486 billion intake in 2016, followed by three massive Chinese corporations—State Grid, Sinopec Group, and China National Petroleum (Fortune Global 500 2017).
The process producing the three hegemonic systems has involved a common set of stages (Wallerstein 1980; Wallerstein 1984, 39–40).
Conditions in the Development of World Systems
As each system developed, a fairly uniform set of conditions unfolded—first, expansion in three critical economic domains, namely agriculture/industry, commerce, and finance; then the formation of an ideology emphasizing free trade; third, the growth of military might to ensure a stable setting for doing business; and finally the demise of the hegemonic power and a restructuring of the system (Wallerstein 1984, 40–42).
THE FUNDAMENTAL ECONOMIC ISSUES OF AGRICULTURE/INDUSTRY, COMMERCE, AND FINANCE
Comparing the Dutch and American world-system experiences, one finds broad similarities and specific differences. The Dutch fishing industry was very successful, and a major contributor was the fifteenth-century invention of the haringbuis or buss, a fishing boat which not only had extensive cargo space but possessed a unique combination of speed, maneuverability, and seaworthiness. The buss provided sufficient deck space to gut and salt fish, preserving the fish and permitting the boats to stay out from six to eight weeks. Using their busses, the Dutch dominated the North Sea herring fishery, the Iceland cod industry, and the Spitzbergen whale hunt. The Dutch also were ingenious at growing crops. Possessing little land, they became experts in draining large areas and perfecting intensified agriculture. Such industrial crops as flax, hemp, hops, and dyes grew well in Dutch soil. The United Provinces not only produced industrial crops but also became the top producer of industrial goods. Textile production centered in the northern Netherlands, and it grew steadily for a century until the 1660s when formidable British competition began to replace it.
The Dutch were also heavily involved in shipbuilding, a highly organized and mechanized activity, using such labor-saving devices as wind-powered sawmills, block and tackles, as well as great cranes to move heavy items. As a precursor to the twentieth century automobile business, Dutch shipbuilding required a number of ancillary industries, producing spare parts, provisions, rope, nautical instruments, and sea charts. In its hegemonic heyday, the United Provinces engaged in a number of other world-leading industries, including the production of paper, books, armaments, crockery, tanned hides, cut tobacco, and soap (Wallerstein 1980, 39–44).
Equipped with an array of high-quality products that included a growing fleet of ships, Dutch merchants were in a strong position. The nation’s international trade flourished, expanding 10-fold between 1500 and 1700. In 1670 the United Provinces shipped three times more tonnage than Great Britain, its closest rival, and more than the tonnage of Britain, France, Spain, Portugal, and Germany combined (Wallerstein 1980, 46). In the early seventeenth century, trading companies’ activities could extend well beyond just trade. Various Dutch trading organizations, most notably the Dutch East India Company, became extensively involved in plundering and privateering, capturing Spanish and Portuguese ships and effectively accumulating revenues to help pay for both the military expenses incurred in naval warfare against Spain and Portugal in Asia and also for the company’s naval fleet and commercial facilities that would reinforce its prominent role in trade (Borschberg 2013).
British merchants found the Dutch trading activities dazzling, watching in amazement and envy as their commercial fleet recaptured Baltic and Mediterranean markets lost earlier to the British (Ormrod 2003, 34). The nation’s reputation as the world’s dominant commercial force survived well beyond the actual fact. As late as 1728, the renowned author Daniel DeFoe referred to the Dutch as “the Carryers of the World, the middle Persons in Trade, the Factors and Brokers of Europe” (Wilson 1941, 4). However, not all observers were admiring. British patriots deeply resented the fact that merchants from the United Provinces were so profit-hungry that if the price was right they would willingly trade with Spain, both countries’ mortal enemy (Kennedy 1987, 68).
During this era some Dutch citizens were making substantial amounts of money, and they needed a safe and secure location for their capital. De Wisselbank van Amsterdam became that location, with its deposits rising 16-fold through the century. The bank’s growing wealth allowed it to develop a substantial credit function, greatly adding to its wealth. In addition, the stability of Dutch currency made it the preferred money of the day, permitting low interest rates and attracting further investment (Wallerstein 1980, 58–59).
As the Dutch world system was declining, the roots of what would eventually be the American system were developing. In the seventeenth and eighteenth centuries, core industries developed in New England featuring shipbuilding, cod fishing, the distillation of rum, and light manufacture; in addition, colonial merchants made profit carrying products between the colonies and Great Britain. Eventually New England merchants, farmers of the middle colonies, and the southern plantations owners realized that it would serve their common interest to divest themselves of British colonial control.
In the nineteenth century, agricultural exports, including slave-grown cotton, were money-making products. At that time the northern industrial sector was developing a variety of products, and in the opening decades of the twentieth century the export of cotton textiles, a variety of machines, electrical appliances, and automobiles were successful (Chase-Dunn 1989, 182–83). American industrial development caught and surpassed its major rivals. For instance, in 1855 the British originated the Bessemer process to produce high-grade steel at low cost. Then the Germans developed a more efficient, low-cost process, but shortly afterwards the United States exceeded both countries, producing 70 percent of the world’s steel within 30 years of the introduction of the Bessemer process (Bunker and Ciccantell 2005, 187). Such an energetically competitive approach is generally missing from the modern American big-business world.
As it rose to hegemonic supremacy following World War II, the United States initiated the Marshall Plan, which helped war-ravaged European countries reestablish themselves economically. The government provided $12.4 billion over four years to both allies and former enemies, and those nations primarily used the money to buy large amounts of food, feed, fertilizer, machines, vehicles, equipment, and fuel from American companies. In the late 1940s, the Marshall Plan served as a major financial tool, helping to solidify the world-wide dominance of American business (Chirot 1977, 149–50; Kaplinsky 2005, 223; O’Brien 2014).
PHOTO 3.1 While the Marshall Plan supplied much-needed aid to both allies and former enemies, it also provided the foundation for the worldwide dominance of American business.
Source: Everett Historical/Shutterstock ID 252142252.
THE DEVELOPMENT OF AN IDEOLOGY, THE COMPLEX OF VALUES AND BELIEFS, THAT SUPPORTS A SOCIETY’S SOCIAL-STRATIFICATION SYSTEMS AND THEIR DISTRIBUTION OF WEALTH, INCOME, AND POWER
The hegemonic power normally seeks an unrestricted international flow of capital and labor as well as political restraints on arbitrary governmental power and the loss of civil liberties. A major reason for supporting free trade is that then the dominant nation does not need to pay for the administrative control that establishing tariffs would entail. Often free trade serves hegemonic powers well. However, if it does not, then they have promoted tariffs. In the nineteenth century, Great Britain, the hegemonic power, was much more supportive of free trade for French, German, Dutch, and Spanish colonies than for its own, which officials felt required protective tariffs for its products. After World War II, the United States grasped the hegemonic baton, promoting the general idea of free world trade but often favoring tariffs to protect its own products. Furthermore during this era, a host of former colonies became independent countries, and most of their leaders supported the United States’s hegemony and ideology (Chase-Dunn, Kawano, and Brewer 2000, 80–81; Leffler 2014; Martin 2008, 172–73; Wallerstein 1984, 41).
The Trump administration has promoted the development of new tariffs against China and other major exporting countries, producing mistrust from both rival and allied nations. Such initiatives are likely to raise the cost of protected goods, which normally can be produced cheaper in countries where the tariffs are not enforced, and the end result of this tariff system could be a sharply lowered world living standard (Coy 2018). It seems very likely that such a policy could produce increased economic inequality.
THE ROLE OF THE MILITARY
While dominant powers in the world system often present themselves as peace-loving, their leaders have recognized the necessity of a strong military presence. In fact, each of the three major world powers established its hegemony by winning wars covering an approximate 30-year span—the Dutch in the Thirty Years War from 1618 to 1648, the British in the Napoleonic Wars from 1792 to 1815, and the Americans in the two world wars occurring between 1914 and 1945 (Wallerstein 1984, 41–42). A close relationship exists between hegemonic wealth and military power. The Netherlands’ commercial success permitted the country to develop the world’s largest navy as well as the only army comparable to Spain’s. Admiral Alfred Thayer Mahan, the leading nineteenth-century authority on sea power, declared the “United Provinces owed their consideration and power to their wealth and their fleets” (Mahan 1889, 97).
While the relationship between wealth and military power could affect prospective hegemony, another factor might come into play. Unlike such countries as France, Germany, Spain, and Russia which have had potential adversaries sharing the same land mass, Great Britain and the United States have had physical separation from potential enemies. Thus historically these two eventual hegemonic powers had less need than other nations to form a large, costly standing army, spending the money instead on economic development and, particularly in the British case, naval expansion (Chase-Dunn 1989, 161).
That situation has dramatically changed. Since the 1950s the expenditure for the American military has been enormous, with major corporations supporting an active world-wide military presence and receiving large contracts for a wide variety of goods and services. The eye-popping reality is that the US military expenditure is over a third the global total—about $611 billion annually, representing 36 percent of all military spending and more than three times the amount spent by second-place China (McCarthy 2017). In his farewell address, President Dwight D. Eisenhower, once a celebrated army general, warned about the growing threat of a “military-industrial complex” (Chirot 1986, 241–42).
THE RESTRUCTURED WORLD SYSTEM
Each of the three hegemonic systems developed after a lengthy war, and afterwards the new national power sought to establish economic and political stability on its own terms (Wallerstein 1984, 42–43). Before World War II was over, in fact, British and American representatives met in Bretton Woods, New Hampshire, to plan a stable economic structure that would promote world financial growth (Kaplinsky 2005, 12–13). The Bretton Woods conference was a distinctly hegemonic performance, favoring the United States. At one point the renowned economist John Maynard Keynes, the chief British representative from the previous hegemonic nation, declared that the Americans “plainly intend to force their conceptions through, regardless of the rest of us” (New York Times 2009). While Keynes and his compatriots grumbled, they acknowledged that the money the Marshall Plan provided would overcome not only British but other European countries’ opposition to American directives at Bretton Woods.
One important outcome of the conference was the formation of several global organizations, notably the International Monetary Fund (IMF), the World Bank (WB), and the General Agreement on Tariffs and Trade, which eventually became the World Trade Organization (WTO). Since the 1980s these organizations have eliminated most restrictions on trade, greatly benefiting multinationals and handicapping the formerly protected peripheral and semiperipheral countries (IMF, WB, and WTO 2017; Kaplinsky 2005, 13–14; Kentor and Boswell 2003, 302).
Writing from the vantage point of having been the chairman of President Clinton’s Council of Economic Advisors, the distinguished economist Joseph E. Stiglitz concluded that while the IMF officially seeks to ensure global economic health, its real agenda is very different. Stiglitz added that IMF support for free trade “may not have contributed to global economic stability, but it did open up vast markets for Wall Street” (Stiglitz 2002, 207).
In fact, such open systems tend to promote their own demise. First, that very openness encourages the spread of the hegemonic power’s technologies. Foreign competitors will have ample opportunity to develop newer, more efficient technologies along with more recent, better organized plants. Bombed into ruin during World War II, the Japanese auto industry rebuilt with cutting-edge technology to become formidable competition for its American rival. More recently China with advancing technology and workforce skill has become a major player in the world’s industrial production.
Second, in order to establish themselves as world leader in the production and sale of goods, the companies residing in the hegemonic power must steadily raise employees’ pay. It is a precarious situation. Competing firms in other countries, which almost inevitably have a lower standard of living, can pay their employees less, permitting these companies to undersell competitors located in the hegemonic power (Ross 2015; Wallerstein 1984, 45).
A decisive moment has arrived. Wallerstein wrote, “Once the clear productivity edge is lost, the structure cracks” (1984, 45). The US hegemonic decline started in the 1970s (Wallerstein 2003, 13). However, while the United States no longer has hegemonic control, a host of American multinationals with great wealth and influence has meant a persistent economic prominence. Sociologist Daniel Chirot claimed that American leadership
in the capitalist world is far from over. For better or for worse, there is no country in the system that will have the power to determine its course as much as the United States … well into the twenty-first [century].
Table 3.2 lists the principal factors in the preceding discussion of world systems.
Table 3.2Major Elements of World-Systems Analysis
A.Three nations which established hegemonic control: Holland 1620–72; Great Britain 1815–73; and United States 1945–67
B.Three types of countries in world systems: core; semiperipheral; and peripheral
C.Four stages in hegemonic development
1.Economic growth: agriculture-industry; commerce; and finance
2.Ideology emphasizing free trade; in reality, core nations promoting ample protective tariffs for their companies’ products
3.Strong military necessary to establish a form of hegemonic control
4.A restructuring of the previous world system, with the new hegemonic power trying to establish economic and political stability that best serves its interests
Sources: Chase-Dunn (1989), Chase-Dunn, Kawano, and Brewer (2000), Wallerstein (1974; 1980; 1984).
The upcoming international analysis displays persistent evidence of US multi-nationals’ influence.
SOCIAL STRATIFICATION AND SOCIAL INEQUALITY IN THE GLOBAL SETTING
Modern world systems have always been in flux, with the production and distribution of such goods as clothes and sport shoes gradually globalizing over time. In the 1960s I spent a few weeks alone in a small town in northern Italy, eventually feeling somewhat homesick and looking forward to any conversation in English. Then one day I saw a young red-haired man sitting in a park. Right away I knew he was an American. He had American jeans, often referred to as Levi’s, and hightop, black-and-white Keds. At that time the United States was either the principal or only market for those products, which were made exclusively in the United States. He had to be an American. Sure enough!
Now the situation is different. Multinationals sell jeans, sport shoes, and many other consumer items once available only in the United Sates in stores throughout the world. As upcoming material indicates, the multinationals responsible for such products establish policies that impact on semiperipheral and peripheral nations’ economies and class structures. One word of caution: A given country’s economic development emerges gradually over time. While modern multinationals exploit many poor nations and contribute to their persistent poverty, those countries, which were once colonies, have usually experienced a lengthy, destructive relationship with core nations that significantly antedates the multinational era. The peripheral nations have been victims, with the majority of citizens deprived of effective schooling and decently paying jobs; these individuals are often severely deprived, but overall they are neither unmotivated nor intellectually challenged. Most Americans are somewhat aware of a similar process occurring on their soil. Much like colonial powers, the US government systematically deprived Native Americans of both their land and traditional way of life, exploiting them mercilessly and transforming them into the poorest, least educated, unhealthiest racial group in the country.
The core states, which have historically been the exploiters, have a fairly different class structure from the one that exists in the widely exploited peripheral and semiperipheral countries. Within the core nations, a fairly uniform level of affluence and work tasks means that the social-class structure tends to be fairly consistent from country to country (Berberoglu 2009; Ishida 1989, 69). The following set of social classes generally prevails:
•The capitalist class, whose members control the nations’ multinationals and possess a disproportionate share of wealth. Capitalist class members’ net worth often varies from one country to another; for instance, in 2016 by one measure (with fairly similar results to the one described in Chapter 1), American CEOs made 260 times as much as average workers in their company while in other countries the figure was considerably less—162 times more in Switzerland, 147 in the United Kingdom, 143 in Canada, just 37 times as much in Japan, and a mere 10 times more in China (Lu and Melin 2016).
•The professional/management (upper-middle) class, whose participants are well educated, often with advanced degrees, and generally well paid.
•The lower-middle class composed of small-business owners, clerks, and salespeople possessing sufficient schooling to qualify for these jobs and enough income to accumulate modest savings.
•The working class including both skilled and unskilled job holders. Members possess limited formal education and considerable variation in job complexity and income. For instance, carpenters, plumbers, electricians, and welders are much more skilled and better paid than assembly-line workers or custodians.
•The poor obtaining the least schooling and fairly few job skills. Poor people’s job situation varies considerably, with some permanently unemployed and others working full-time and receiving a low wage (Berberoglu 2009, 36; Boliver 2017; Müller, Lüttinger, König, and Karle 1989; Sicakyuz 2008).
While social class has a major impact on people’s job prospects, gender can also play a significant role. A confidential report ordered by Walmart itself revealed that in 1995 in many categories of employment the conglomerate was paying its US female workers 19 percent less than their male counterparts and that men were five-and-a-half times more likely to receive a promotion to a managerial position. In spite of receiving this information, Walmart executives made few adjustments in their hiring and promotion policies. In 2010 the Supreme Court dismissed a sex discrimination law suit involving 1.5 million Walmart employees (Bario 2010; Totenberg 2011). Claims of Walmart’s gender discrimination have persisted. In 2017 two former female Walmart employees filed a lawsuit in federal court saying that the company has treated pregnant workers as “second-class citizens,” rejecting their requests to limit climbing on ladders, heavy lifting, and other tasks posing dangers for them. The suit cited a 2015 Supreme Court decision indicating that pregnant women should be treated as temporarily disabled workers. A minimum of 20,000 past or present employees and perhaps as many as 50,000 might be eligible to join the suit (Wiessner 2017).
In contrast to the core countries, the semiperipheral and peripheral nations have their own fairly uniform set of classes, which overall provide their members less valuable financial and human capital than the core countries supply:
•The upper class which is either corporate and engaged in industrial and commercial enterprises or landowning and involved in crop and livestock production; in addition, top political leaders primarily live and work in the national capital.
•The upper-middle class containing a small number of well-educated professionals and high-level government officials.
•The self-employed lower-middle class made up of artisans, shopkeepers, and small-business people.
•The peasant class providing assorted agricultural products and either owning or leasing their land.
•The working class composed of industrial, clerical, and service job holders as well as temporarily unemployed individuals.
•The informal sector of people engaging a wide range of small illegal businesses, which can be fairly stable money makers; some of the poor are permanently unemployed and/or homeless (Berberoglu 2009, 53; Hoffman and Centeno 2003; Robinson 2012).
Multinationals’ investment in semiperipheral and peripheral nations has consistently been exploitative, undermining those nations’ economies in several ways.
STRUCTURAL DISTORTION IN THE ECONOMY Historically core states have used less developed nations as sources for extraction of minerals, crops, or natural resources like timber, coal, or oil. The extraction work is largely unskilled and low paid, offering jobs that are a far cry from the more diversified opportunities that exist in core nations, where a wide range of production and sales positions develop (Chirot 1986, 99; Kerbo 2006; Phillipot 2010). Even when manufacturing moves to poor countries, benefits for the local workforce are modest. Multinationals’ heavy investment permits them to gain control over various political and economic processes in the host nation, structuring job activities to maximize their profits. As a pair of sociologists suggested, the giant companies become “the only game in town” (Kentor and Boswell 2003, 310).
AGRICULTURAL DISRUPTION When multinationals invest in agriculture in less developed countries, the rules of the game once again promote maximized profit. Mechanized farming and extended use of land become the order of the day. Food prices rise, and poor peasants find it increasingly difficult to locate land to grow their crops. Agricultural disruption is hardly a new process. It is well known that a blight was the immediate cause of the so-called “potato famine” which between 1845 and 1852 drove over a million Irish citizens to migrate to the United States. What is less well known is that starting long before the blight, much of the country’s best land was used for exported products, particularly livestock which continued to be shipped to England, often under heavy guard, throughout the seven-year famine (Hutchinson Encyclopedia of Britain 2011; Kerbo 2006; Kinealy 2002).
TOP-LEVEL COLLUSION As a rule the relationship between a developing nation’s political leadership and multinationals’ representatives becomes intimate, mutually self-serving, and corrupted, paving the way for multinationals to maximize profits, often at most local citizens’ expense. A report by the Organisation for Economic Co-operation and Development indicated 427 completed bribery cases involving public officials in both poor and wealthy countries between 1999 and 2014, with 2011 the peak year. While the report did not reveal the names of the corporations involved, a prime suspect is Walmart, which faced probes for bribery in several countries after revealing violations in Mexico (Ferdman 2014; Jones 2010; Voreacos and Dudley 2014).
OPEN MARKETS Since the United Provinces obtained hegemonic power, core nations have generally supported unrestricted trade. Their multinationals usually possess the vast resources to dominate commercial arrangements, often in developing nations undermining fledgling industries. Frequently, as previously noted, the core nations’ call for open markets is distinctly hypocritical. As the dominant multinationals located in such countries as Germany, Japan, and the United States were establishing themselves, they depended on import tariffs or other protections from foreign competition. In fact, some of those measures continue. The United States and the European Union continue to pay their agribusinesses substantial subsidies, allowing them to underprice foreign farmers, many of which are small, struggling, and located in developing nations (Kerbo 2006).
In the fierce global economy, it is hardly surprising that the 25 poorest nations are struggling, suffering a common set of crippling disadvantages. To begin, many of them are still embroiled in political unrest and violence, which has persisted since their political independence. These conditions are not only life-threatening but adversely affect economic development. In addition, to advance economically, countries require a significant portion of educated citizens and infrastructure development. However, in 17 of the 25 poorest nations at least a third of the population is illiterate, and in 21 of the 25 poorest countries less than half the people have access to electricity. In addition, these nations generally lack enough doctors and modern health-care facilities. In part for this reason, their life expectancy is low—never above 70 years and in some cases such as the central African country of Chad with only 51.6, over 30 years fewer than the developed nations with the highest life expectancy cited in Table 3.1 (Stebbins, Sauter, and Frohlich 2016).
Since the 1980s an additional factor has intensified the global pursuit of profit. Large institutional investors, which are major big businesses, have accumulated enough collective savings to exert significant impact on financial markets, pushing for accelerated cash flow to shareholders. Corporate officials pass on this sense of urgency to the leaders of the supplier factories which manufacture their products. The leading multinationals have become adept at the practice. Walmart has developed into the world’s largest retailer by pressuring its suppliers to compete with each other to manufacture the least expensive products. To obtain a similar result, a British multinational used a variety of techniques including so-called “cross-cutting,” where the retailer obtains a price quote from one supplier, then contacts a second with the intention of undercutting it, and finally returns to the original supplier (Kaplinsky 2005, 176). It is hardly a hospitable employment setting for workers in those supplier companies. In 2006 about 66 million people, the majority of whom were women, assembled goods for a global market. They faced long hours, low wages, environmental threats, sexual harassment, and union repression. The frequent absence of unions means that employees have no prospect of collective bargaining to improve wages and working conditions (Chandy 2017; Palpacuer 2008).
The previous set of points has emphasized that the multinational-driven global system has tended to exploit peripheral and semiperipheral states. Do the core nations, which created colonies and later multinationals, bear the full responsibility for poor countries’ degraded conditions? Modern-world-systems theory points to those nations’ significant negative contribution. It is important, however, to acknowledge an additional factor: Many poor countries have suffered corrupt leadership that helped drain the nation’s resources, and either civil servants or businessmen who oppose that leadership face major sanctions. In such corrupted national contexts, a widespread perception has often developed that the civil service is not a sector of government that promotes citizens’ rights but instead a fairly secure means for becoming rich (Bradshaw and Wallace 1996, 51–52; Hors 2017).
The last point emphasizes that while globalization significantly impacts people’s life chances, national factors such as the governmental concern for citizens’ rights also affect social inequality. In examining 143 countries, researchers at the IMF learned that additional conditions influencing a given nation’s social inequality included technology, education, the sectional share of employment, and governmental support for public welfare.
•Technology: Across all world regions, there has been a steady increase in nations’ distribution of information and communications technology. Individuals schooled to use such advanced skills will widen the income gap from those without such skills. This factor is the most prominent one that has driven a recent acceleration of economic inequality across nations.
•Education: Increased education is likely to provide better access to higher-skilled, better-paying positions.
•Sectional share of employment: Shifts in type of work can significantly impact many people’s income. If industrial development sharply increases in a country, the new job holders are likely to experience much more income growth than farmers.
•Governmental concern for public welfare: A study of social inequality in 60 nations found that whether or not a nation has a large public sector that provides the citizenry effective schooling, health care, and other benefits significantly impacts income inequalities, particularly for the poorest states. A federal government’s ability to provide such benefits depends heavily on its economic welfare, and the extent of big-business involvement in countries can decisively influence that condition. Inevitably taxes can play an important role. A review of 53 fairly developed nations indicated that those with high tax rates for wealthy citizens such as France and Switzerland possess relatively low levels of economic inequality compared to the United States, which has low tax rates for the wealthy and high levels of economic inequality. However, while money is important, a critical necessity concerns the level of sustained commitment political leaders make to their citizens’ economic well-being (Cloninger 2016; Hoffman and Centeno 2003; Hors 2017; International Monetary Fund 2007; Kollmeyer 2013; Lee, Nielsen, and Alderson 2007).
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