GLOBAL FINANCIAL CRISIS 9
GlobalFinancial Crisis, Poverty
GlobalFinancial Crisis, Poverty
There is inequality in access to and control of resources in eachcountry,and this is the reason why there is a wide gap between the wealthyand the have-nots in the world. The widening gap,however,has been linked to International Political Economy (IPE). It isbelieved that there are theories of this broad ideology that areresponsible for the widening gap between the different economicclasses in the world. Remarkably, these theories revolve around whatmany people believe in and sometimes the government is not to blamefor the global financial crisis but rather the ideologies which thesepeople believe in. This paper is,therefore,focuses on discussing three main theories of international politicaleconomy and how they are linked to this financial crisis. Notably,the most common theories include realism, liberalism, and Marxism(Australian Psychologist, global special issue on Poverty and povertyreduction, 2010, 54).
Realismbelieves in the struggle that goes on in different states, and thatinternational economy is important in the sustenance of a state.Realists have in mind that the way forward for the development ofdifferent nations is the struggle that occurs amongthe states.Particularly, the reason why some countries are richer than others isthat they are economically and militarily stronger and during thestruggle, therefore, there is a possibility of acquiring resourcesfrom smaller, weaker states (Iles, 2006, 342).
Realismis considered to have emanated from the modern state system thatdeveloped from the Peace of Westphalia in 1648. Notably, the treatywas based on the establishment of states and creation of boundariesthat would be apt for governing people found in a given area. Assuch, people belonging to a given geographic nation should begoverned by one body where they are supposed to follow a set ofinstructions that are aimed at coordinating and regulating them(Lloyd-Jones & Rakodi, 2014, 27). Also, the survival and growthof a given state are dependent on systems and policies that the saidentity has created as well as the amount of input that its citizensset towards the development of their country. Besides, the concept ofrealism focuses on the aspect of each country relying on politics topush for its national interests without giving heed to the needs ofothers. As a result, an element of order fails to be achieved aroundthe world in the end.
Moreover, the realism theory plays a significant role in influencingthe current global economic crisis. Remarkably, this approach isedged on the fact that it promotes an element of people takingactions bound to benefit them without giving much heed to the needsof others (Galloway, 2013, 361). It, therefore, promotes the spiritof capitalism, whereby entities are set to engage in activities wherethey gain more than others. Notably, this has led to parties engagingin businesses that are monopolies in the industry as subsequentlymaking it difficult for other players to operate in the same market(Brock, 2006, 171). As a result, these entities end up making lots ofprofit margins at the expense of others who equally put in moreeffort to achieve success. The resultant situation is a case of onlya few people ending up with huge amounts of money while the majoritylanguishes in abject poverty.
Thistheory may be used to promote global economy through creating anunderstanding that the world is now a global village and people arenow more connected than before. Therefore, global financialinstitutions including the World Bank, International Monetary Fund,and World Trade Organization should empower various countries to comeup with strategies that would push for the hastening of businessprocesses. As a result, this theory postulates that these countriesshall come to the understanding that they need to take proper actiontowards their continued growth as well as that of other economies.
Notably,this is the ideology that strongly emphasizes the importance ofinterdependence. It states that countries are supposed to coordinatefor the primary purpose of development. Also, it outlines and focuseson the significance of different financial institutions and theimpact they have on individuals. In most cases, this concept isresponsible for the way the government runs, and as such, this ismostly reflected in the economy of that particular state.
Notably,this theory was developed in the 18thcentury by Adam Smith (Ossei-Owusu, 2012, 301). Immediately, afterits development, most countries in Europe preferred it, until the1940s and 1970s when an alternative, the Keynesianism theory wasdeveloped. The theory was well enjoined with the realist theory justafter the Second World War. With such action, it allowed countries tocontinue experiencing individual growth. At the same time, it gaveroom for the action of private commerce that is equally important ininfluencing the growth of world economies.
Thistheory, however, controls the current global financial crisis in thatit provides the opportunity with ease of access to other markets,thereby, giving room for some countries to take advantage of others’economies (Scavenius, 2013, 15). As such, these countries rely moreon exporting goods to while importing less from these nations.Consequently, this results in an unequal trade that is bound to causegreat financial problems around the world. Also, this theory proposesimproving global economy by providing all countries with an equaltrading ground. As a result, this process will ensure that allcountries benefit from trade practices that are conducted by them,and, therefore, the flow of money is bound to increase around theworld significantly.
Notably,this is one of the most common forms ofIPE theories and is mostly applied in many nations. It is anillustration of the struggle of different classes, especially at theinternational levels,and this is mostly seen in the way the poor are always struggling andgoing through challenges to fit intothe fast changing world. Also, this theory puts it that there existsa stiff competition among the existing classes and it is clear thatonly the elites seem to have a say in what happens in the society,leading to what is known as the dependency theory. Karl Marx, who hasbeen termed as the father of philosophy, is one of the proponentswho dealt with global poverty. Notably, his argument dwelt mostly onhumanitarian issues which focused on individuals in close proximities(Burnham, 1994, 223).
Ananalysis of the theory shows that Karl Marx is one of the firstpeople to come up with social equality and as a result, he advocatedfor human beings to treat each other equally, especially when itcomes to sharing resources equitably.Many would question the origin of equality and how it works, butsocial equality has never been fully achieved, and this is seen byhow the masses have access to resources and the way it is becoming atopic in many debates. Mainly, Marxism came into full practice at thetime when there was a very wide gap between the rich and the poor,and therefore, this came as some form of relief whereby people weretaught how to co-exist in harmony (Lyon-Callo, 2012, 218).
DespiteKarl Marx’s point of view, the French Revolution, which took placein 1798 was a sign of dissatisfaction, especially to the elites whostarted feeling threatened that some of the wealth would be snatchedfrom them. As a result, this brought an end to the feudal classes,and this is attributed to the strong urge of the revolutionaries(Cline, 2004, 26). According to Marxism, poverty is often seen in areligious way,especially in some denominations. Some of the religiousdenominations believe in heavenly riches and that suffering here onearth will make them get rewarded once they get to heaven. As aresult, they become reluctant in attaining financial stability andthat is why most of these people who dwell in religion becomedisillusioned when it comes to ownership of property as theyassociate it with the evils that happen in society. Notably, thismentality has increased the number of poor people in society whichreflects in the global economy (Sumner & Tiwari, 2011, 142).
TheMarxist theory is thought to causes global financial crisis. Particularly, this is because it provides room for elites to have asay on financial matters and take actions that would result in theirfinancial gain without putting much consideration to the gains thatwould be made by entities that are on the lower scale of financialcapability (Frankel & Saravelos, 2012, 221). The theory may beused to propose financial growth around the world through improvingthe economic status of people. The concept could be well achievedthrough the provision of information that is bound to influence howpeople think as well as actions that they may take to improve thegeneral state of their being as well as that of the entire world. Inthe end, such people are bound to gain immensely given the fact thatthey shall take actions that are good for their survival as well asthe growth of others.
Inconclusion, notably, one of the most effective ways of ending povertyis by taking a critical look at the theoretical perspectives and themanner in which they can be employed so that they can lead toeffective control of poverty. The analysis of the theoriesmentionedabove helps greatly in the study of poverty, its causes and impact onsociety. This move helps in coming up with ways that can be used tocontain poverty. Realism and liberalism have been found to be capableof showing signs of poverty reduction.However,Marxism seems to be the biggest stumbling block in this case becauseit fails to admit that an individual is the one that should be blamedfor his or her state of poverty. Notably, Marxism says that povertyis a religious state, and that those who are sincerely poor willeventually receive their reward and richness in heaven and thatpoverty here on earth is just temporary. Research has shown that theonly way in which global poverty can be done away with is by changingthe way the society has been structured.
AustralianPsychologist global special issue on Poverty and poverty reduction(June 2010). (2009). AustralianPsychologist,44(1),63-64. http://dx.doi.org/10.1080/00050060802665672
Brock,G. (2006). Global Poverty and Desert. Politics, 26(3), 168-175.http://dx.doi.org/10.1111/j.1467-9256.2006.00265.x
Burnham,P. (1994). Open Marxism and vulgar international political economy.Review Of International Political Economy, 1(2), 221-231.http://dx.doi.org/10.1080/09692299408434277
Cline,W. (2004). Trade policy and global poverty. Washington, DC.:Institute for International Economics. 13-32
Frankel,J., & Saravelos, G. (2012). Can leading indicators assess countryvulnerability? Evidence from the 2008–09 global financialcrisis. Journalof International Economics, 87(2),216-231.
Galloway,A. (2013). The Poverty of Philosophy: Realism and Post-Fordism.Critical Inquiry, 39(2), 347-366. http://dx.doi.org/10.1086/668529
Iles,A. (2006). The international political economy of making consumptionsustainable. Review Of International Political Economy, 13(2),340-358. http://dx.doi.org/10.1080/09692290600625603
Lloyd-Jones,T., & Rakodi, C. (2014). Urbanlivelihoods: A people-centred approach to reducing poverty.Routledge. 22-29
Lyon-Callo,V. (2012). Homelessness or the Violence of Poverty and Exploitation:Does It Matter?. Rethinking Marxism, 24(2), 215-220.http://dx.doi.org/10.1080/08935696.2012.657435
Ossei-Owusu,S. (2012). Decoding Youth and Neo-Liberalism: Pupils, Precarity, andPunishment. Journal Of Poverty, 16(3), 296-307.http://dx.doi.org/10.1080/10875549.2012.695536
Scavenius,T. (2013). National Responsibility and Global Poverty. GlobalSociety, 27(1), 7-23. http://dx.doi.org/10.1080/13600826.2012.734283
Sumner,A. & Tiwari, M. (2011). Global Poverty Reduction to 2015 andBeyond. Global Policy, 2(2), 138-151.http://dx.doi.org/10.1111/j.1758-5899.2011.00077.x