vimothy
yurp
Since there seemed to be so much opposition to globalisation in the "Occupying the moral high ground" thread, I thought I would post something giving the liberal, pro-capitalist view of globalisation. This is from George Reisman's classic study, Globalization: the Long-Run Big Picture.
Read the whole thing (it's worth it) here: http://www.mises.org/story/2361
Globalization, in conjunction with its essential prerequisite of respect for private property rights, and thus the existence of substantial economic freedom in the various individual countries, has the potential to raise the productivity of labor and living standards all across the world to the level of the most advanced countries. In addition, it has the potential to bring about the radical improvement in productivity and living standards in what are today the most advanced countries, and to provide the strongest possible foundation for unprecedented further economic advance everywhere.
These overwhelmingly beneficial results are often hidden from view by the fact that at the same time globalization implies a substantial decline in the relative or even absolute nominal GDPs of today's advanced countries, the experience of which engenders opposition to the process. What is not seen is that to whatever extent globalization might reduce absolute nominal GDP in today's advanced countries, it reduces prices many times more, with the result that it correspondingly increases their real GDP, and that to whatever extent it reduces merely their relative nominal GDP, it again increases their real GDP many times more.
This article shows that by incorporating billions of additional people into the global division of labor, and correspondingly increasing the scale on which all branches of production and economic activity are carried on, globalization makes possible the unprecedented achievement of economies of scale—the maximum consistent with the size of the world's population. First and foremost among these will be the very substantial increase in the number of highly intelligent, highly motivated individuals working in all of the branches of science, technology, and business. This will greatly accelerate the rate of scientific and technological progress and business innovation. The achievement of all other economies of scale will also serve to increase what it is possible to produce with any given quantity of capital goods and labor. Out of this larger gross product comes a correspondingly larger supply of capital goods, which makes possible a further increase in production, resulting in a still larger supply of capital goods, in a process that can be repeated indefinitely so long as scientific and technological progress and business innovation continue and an adequate degree of saving and provision for the future is maintained. The article shows that from the very beginning, the process of globalization serves to promote capital accumulation simply by dramatically increasing production in the countries in which foreign capital is invested, out of which increase in production comes an additional supply of capital goods.
These overwhelmingly beneficial results are often hidden from view by the fact that at the same time globalization implies a substantial decline in the relative or even absolute nominal GDPs of today's advanced countries, the experience of which engenders opposition to the process. What is not seen is that to whatever extent globalization might reduce absolute nominal GDP in today's advanced countries, it reduces prices many times more, with the result that it correspondingly increases their real GDP, and that to whatever extent it reduces merely their relative nominal GDP, it again increases their real GDP many times more.
This article shows that by incorporating billions of additional people into the global division of labor, and correspondingly increasing the scale on which all branches of production and economic activity are carried on, globalization makes possible the unprecedented achievement of economies of scale—the maximum consistent with the size of the world's population. First and foremost among these will be the very substantial increase in the number of highly intelligent, highly motivated individuals working in all of the branches of science, technology, and business. This will greatly accelerate the rate of scientific and technological progress and business innovation. The achievement of all other economies of scale will also serve to increase what it is possible to produce with any given quantity of capital goods and labor. Out of this larger gross product comes a correspondingly larger supply of capital goods, which makes possible a further increase in production, resulting in a still larger supply of capital goods, in a process that can be repeated indefinitely so long as scientific and technological progress and business innovation continue and an adequate degree of saving and provision for the future is maintained. The article shows that from the very beginning, the process of globalization serves to promote capital accumulation simply by dramatically increasing production in the countries in which foreign capital is invested, out of which increase in production comes an additional supply of capital goods.
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Output per capita in the advanced, industrial economies is currently 20 times as great as it is in the rest of the world. This is because if 1 billion people produce .8 of the world's output, while 5 billion people produce only .2 of the world's output, those 1 billion produce 4 times as much as the 5 billion. And if the 1 billion people of the First World produce 4 times as much as the 5 billion people of the rest of the world, they produce 20 times as much as do just 1 billion people in the rest of the world. In the rest of the world, the output of 1 billion people is a mere .04 of the output of the world; it takes 5 billion people in the rest of the world to produce its .2 of the world's output. The ratio of the .8 of the world's output produced by the 1 billion people of the First World to the .04 of output produced by 1 billion people in the rest of the world is 20:1.
This radical difference in per capita productivity is the measure of the improvement needed in the rest of the world to achieve per capita parity with the First World and the standard of living of the First World.
This radical difference in per capita productivity is the measure of the improvement needed in the rest of the world to achieve per capita parity with the First World and the standard of living of the First World.
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What is to be feared in connection with globalization is not that it will occur but that it will not occur, that the process of its achievement will be aborted or, indeed, thrown into reverse. Progress toward globalization can be aborted by the outbreak of war, including large-scale global terrorism. In such conditions, outside sources of supply can no longer be relied upon, and greater economic self-sufficiency becomes necessary—which, of course, constitutes movement in the opposite direction of globalization. It can also be stopped by the failure of much or most of the world to adopt and then maintain the pro-free-market political-economic policies necessary to its achievement, including such failure in our own country.
Read the whole thing (it's worth it) here: http://www.mises.org/story/2361