Reference no: EM131381478

Response 2 Economics text questions

https://www.sas.upenn.edu/~dludden/SenGlobalism.htm

1-) For Sen the issue isn't globalization or the spread of markets but rather the institutional arrangements that either do or don't create fair opportunities. What kinds of omissions and commissions in the institutional arrangements does he think need greater attention to make globalization a fairer process for all?

2-) In discussing whether globalization leads to greater inequality how does Sen argue the apologists for globalization respond to such issue?

TEXT

ARE THE POOR GETTING POORER?

The principal challenge relates to inequality--international as well as intranational. The troubling inequalities include disparities in affluence and also gross asymmetries in political, social, and economic opportunities and power.

A crucial question concerns the sharing of the potential gains from globalization--between rich and poor countries and among different groups within a country. It is not sufficient to understand that the poor of the world need globalization as much as the rich do; it is also important to make sure that they actually get what they need. This may require extensive institutional reform, even as globalization is defended.

There is also a need for more clarity in formulating the distributional questions. For example, it is often argued that the rich are getting richer and the poor poorer. But this is by no means uniformly so, even though there are cases in which this has happened. Much depends on the region or the group chosen and what indicators of economic prosperity are used. But the attempt to base the castigation of economic globalization on this rather thin ice produces a peculiarly fragile critique.

On the other side, the apologists of globalization point to their belief that the poor who participate in trade and exchange are mostly getting richer. Ergo--the argument runs--globalization is not unfair to the poor: they too benefit. If the central relevance of this question is accepted, then the whole debate turns on determining which side is correct in this empirical dispute. But is this the right battleground in the first place? I would argue that it is not.

GLOBAL JUSTICE AND THE BARGAINING PROBLEM

Even if the poor were to get just a little richer, this would not necessarily imply that the poor were getting a fair share of the potentially vast benefits of global economic interrelations. It is not adequate to ask whether international inequality is getting marginally larger or smaller. In order to rebel against the appalling poverty and the staggering inequalities that characterize the contemporary world--or to protest against the unfair sharing of benefits of global cooperation--it is not necessary to show that the massive inequality or distributional unfairness is also getting marginally larger. This is a separate issue altogether.

When there are gains from cooperation, there can be many possible arrangements. As the game theorist and mathematician John Nash discussed more than half a century ago (in "The Bargaining Problem," published in Econometrica in 1950, which was cited, among other writings, by the Royal Swedish Academy of Sciences when Nash was awarded the Nobel Prize in economics), the central issue in general is not whether a particular arrangement is better for everyone than no cooperation at all would be, but whether that is a fair division of the benefits. One cannot rebut the criticism that a distributional arrangement is unfair simply by noting that all the parties are better off than they would be in the absence of cooperation; the real exercise is the choice between these alternatives.

AN ANALOGY WITH THE FAMILY

By analogy, to argue that a particularly unequal and sexist family arrangement is unfair, one does not have to show that women would have done comparatively better had there been no families at all, but only that the sharing of the benefits is seriously unequal in that particular arrangement. Before the issue of gender justice became an explicitly recognized concern (as it has in recent decades), there were attempts to dismiss the issue of unfair arrangements within the family by suggesting that women did not need to live in families if they found the arrangements so unjust. It was also argued that since women as well as men benefit from living in families, the existing arrangements could not be unfair. But even when it is accepted that both men and women may typically gain from living in a family, the question of distributional fairness remains. Many different family arrangements--when compared with the absence of any family system--would satisfy the condition of being beneficial to both men and women. The real issue concerns how fairly benefits associated with these respective arrangements are distributed.

Likewise, one cannot rebut the charge that the global system is unfair by showing that even the poor gain something from global contacts and are not necessarily made poorer. That answer may or may not be wrong, but the question certainly is. The critical issue is not whether the poor are getting marginally poorer or richer. Nor is it whether they are better off than they would be had they excluded themselves from globalized interactions.

Again, the real issue is the distribution of globalization's benefits. Indeed, this is why many of the antiglobalization protesters, who seek a better deal for the underdogs of the world economy, are not--contrary to their own rhetoric and to the views attributed to them by others--really "antiglobalization." It is also why there is no real contradiction in the fact that the so-called antiglobalization protests have become among the most globalized events in the contemporary world.

ALTERING GLOBAL ARRANGEMENTS

However, can those less-well-off groups get a better deal from globalized economic and social relations without dispensing with the market economy itself? They certainly can. The use of the market economy is consistent with many different ownership patterns, resource availabilities, social opportunities, and rules of operation (such as patent laws and antitrust regulations). And depending on these conditions, the market economy would generate different prices, terms of trade, income distribution, and, more generally, diverse overall outcomes. The arrangements for social security and other public interventions can make further modifications to the outcomes of the market processes, and together they can yield varying levels of inequality and poverty.

The central question is not whether to use the market economy. That shallow question is easy to answer, because it is hard to achieve economic prosperity without making extensive use of the opportunities of exchange and specialization that market relations offer. Even though the operation of a given market economy can be significantly defective, there is no way of dispensing with the institution of markets in general as a powerful engine of economic progress.

But this recognition does not end the discussion about globalized market relations. The market economy does not work by itself in global relations--indeed, it cannot operate alone even within a given country. It is not only the case that a market-inclusive system can generate very distinct results depending on various enabling conditions (such as how physical resources are distributed, how human resources are developed, what rules of business relations prevail, what social-security arrangements are in place, and so on). These enabling conditions themselves depend critically on economic, social, and political institutions that operate nationally and globally.

The crucial role of the markets does not make the other institutions insignificant, even in terms of the results that the market economy can produce. As has been amply established in empirical studies, market outcomes are massively influenced by public policies in education, epidemiology, land reform, microcredit facilities, appropriate legal protections, et cetera; and in each of these fields, there is work to be done through public action that can radically alter the outcome of local and global economic relations.

INSTITUTIONS AND INEQUALITY

Globalization has much to offer; but even as we defend it, we must also, without any contradiction, see the legitimacy of many questions that the antiglobalization protesters ask. There may be a misdiagnosis about where the main problems lie (they do not lie in globalization, as such), but the ethical and human concerns that yield these questions call for serious reassessments of the adequacy of the national and global institutional arrangements that characterize the contemporary world and shape globalized economic and social relations.

Global capitalism is much more concerned with expanding the domain of market relations than with, say, establishing democracy, expanding elementary education, or enhancing the social opportunities of society's underdogs. Since globalization of markets is, on its own, a very inadequate approach to world prosperity, there is a need to go beyond the priorities that find expression in the chosen focus of global capitalism. As George Soros has pointed out, international business concerns often have a strong preference for working in orderly and highly organized autocracies rather than in activist and less-regimented democracies, and this can be a regressive influence on equitable development. Further, multinational firms can exert their influence on the priorities of public expenditure in less secure third-world countries by giving preference to the safety and convenience of the managerial classes and of privileged workers over the removal of widespread illiteracy, medical deprivation, and other adversities of the poor. These possibilities do not, of course, impose any insurmountable barrier to development, but it is important to make sure that the surmountable barriers are actually surmounted.

OMISSIONS AND COMMISSIONS

The injustices that characterize the world are closely related to various omissions that need to be addressed, particularly in institutional arrangements. I have tried to identify some of the main problems in my book Development as Freedom (Knopf, 1999). Global policies have a role here in helping the development of national institutions (for example, through defending democracy and supporting schooling and health facilities), but there is also a need to re-examine the adequacy of global institutional arrangements themselves. The distribution of the benefits in the global economy depends, among other things, on a variety of global institutional arrangements, including those for fair trade, medical initiatives, educational exchanges, facilities for technological dissemination, ecological and environmental restraints, and fair treatment of accumulated debts that were often incurred by irresponsible military rulers of the past.

In addition to the momentous omissions that need to be rectified, there are also serious problems of commission that must be addressed for even elementary global ethics. These include not only inefficient and inequitable trade restrictions that repress exports from poor countries, but also patent laws that inhibit the use of lifesaving drugs--for diseases like AIDS--and that give inadequate incentive for medical research aimed at developing nonrepeating medicines (such as vaccines). These issues have been much discussed on their own, but we must also note how they fit into a general pattern of unhelpful arrangements that undermine what globalization could offer.

Another--somewhat less discussed--global "commission" that causes intense misery as well as lasting deprivation relates to the involvement of the world powers in globalized arms trade. This is a field in which a new global initiative is urgently going beyond the need--the very important need--to curb terrorism, on which the focus is so heavily concentrated right now. Local wars and military conflicts, which have very destructive consequences (not least on the economic prospects of poor countries), draw not only on regional tensions but also on global trade in arms and weapons. The world establishment is firmly entrenched in this business: the Permanent Members of the Security Council of the United Nations were together responsible for 81 percent of world arms exports from 1996 through 2000. Indeed, the world leaders who express deep frustration at the "irresponsibility" of antiglobalization protesters lead the countries that make the most money in this terrible trade. The G-8 countries sold 87 percent of the total supply of arms exported in the entire world. The U.S. share alone has just gone up to almost 50 percent of the total sales in the world. Furthermore, as much as 68 percent of the American arms exports went to developing countries.

The arms are used with bloody results--and with devastating effects on the economy, the polity, and the society. In some ways, this is a continuation of the unhelpful role of world powers in the genesis and flowering of political militarism in Africa from the 1960s to the 1980s, when the Cold War was fought over Africa. During these decades, when military overlords--Mobuto Sese Seko or Jonas Savimbi or whoever--busted social and political arrangements (and, ultimately, economic order as well) in Africa, they could rely on support either from the United States and its allies or from the Soviet Union, depending on their military alliances. The world powers bear an awesome responsibility for helping in the subversion of democracy in Africa and for all the far-reaching negative consequences of that subversion. The pursuit of arms "pushing" gives them a continuing role in the escalation of military conflicts today--in Africa and elsewhere. The U.S. refusal to agree to a joint crackdown even on illicit sales of small arms (as proposed by UN Secretary-General Kofi Annan) illustrates the difficulties involved.