From the Introduction:
Global income inequality has been steadily rising since the 1980s. The sensational success of Thomas Piketty’s “Capital” shows that the topic resonates well with the global population. Many have argued that this has been the result of “globalisation” (Palma, 2006), another concept which is widely discussed but rarely defined. Most divide globalisation into economic globalisation, focusing on international trade and foreign direct investments, and political globalisation, focusing on institutional arrangements. This division hinges on the existence of a conceptual separation between political logic from economic policy, which seems untenable. The contour of the global economy, the structure of the global market, who can participate in it and how they can engage in exchange are seldom apolitical choices.
This paper showcases four scenarios to show that the “political economy” aspect of globalisation is important, and posits that the “neoliberal version of globalisation” has contributed significantly towards increased inequality rather than just globalization. This detrimental and pervasive effect of neoliberalism has been carried out through dismantling the welfare state, reduced power of trade unions, massive industrial consolidation, deregulation of the economy, increased financialization of the international economy and the belief in the primacy of “self-regulating” market. The author believes it is critical to specify that a specific form of globalisation is at fault rather than the whole idea of globalisation; otherwise many may wrongly associate increasing inequality as a necessary consequence of engaging with the global economy and thereby decide to disengage their country and move towards autarky, which might be detrimental. Also unless we define the form of globalisation that is damaging, the debate wrongly focuses on merits and demerits of globalisation rather than what form of global engagement suits an individual country the best. The challenge is to take advantage of globalisation while limiting its offsetting costs.
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