Student Papers

Aspects of Globalization: Bridging the economic and cultural gaps through effective capitalism and conflict management

Delicia Hurdle-Boakye

Introduction to Globalization: The Orientation to Conflict

When the Berlin Wall fell in 1989, symbolically making the end of the Cold War, there was a widespread surge of optimism in the world, as people looked forward to the prospect of freedom from the threat of world war and nuclear holocaust. This belief in the possibility of a 'new world order' was reinforced by the seeming outbreak of peace over the next few years in a number of long-standing regional conflicts, notably in Southern Africa and the Middle East. Moreover, the hope that turning swords into ploughshares could also herald a new era of global prosperity was strengthened in the eyes of many by the perception that the whole world could now benefit from adopting the market economy model in place of failed system of Soviet central planning.

Even without the benefit of hindsight, however, it is possible to recognize that such optimism was always misplaced and that it ignored the existence of some growing global problems, which even then should have given world leaders cause for alarm. These included the crumbling of civil order in parts of the developing world and the former Soviet Union, the soaring numbers of people seeking asylum in western Europe and the US, and the emergence of a growing 'underclass' in many parts of the developed world arising from chronic high unemployment and rising poverty. Perhaps most disturbing of all should have been the bursting in 1990 of a speculative investment bubble in Japan (the world's second largest economy) from which neither its financial market nor the economy as a whole have ever shown any sign of recovering.

These apparently disparate developments have one common element: the international integration of markets for goods, services, and capital is pressuring societies to alter their traditional practices, and in return broad segments of these societies are putting up a fight. The pressures for change are tangible and affect all societies: In Japan, large corporations have started to dismantle the postwar practice of lifetime employment, one of Japan's most distinctive social institutions. In Germany, the federal government had been fighting union opposition to cuts on pension benefits aimed at improving competitiveness and balancing the budget. In South Korea, trade unions have gone on nationwide strikes to protest new legislation making it easier for firms to lay off workers. Developing countries in Latin America have been competing with each other in opening up to trade, deregulating their economies, and privatizing public enterprises (Rodrik 2-3). Yet for much of the intervening decade both official western propaganda and a generally complacent mass media dominated by big business interests have largely chosen to ignore or play down the significance of such indicators. On the contrary nearly all the most influential opinion formers have sought to emphasize the great economic benefits to be expected fro the spread of 'globalization'.

The process that has come to be called "globalization" is exposing a deep fault line between groups who have the skill and mobility to flourish in global markets and those who either don't have these advantages or perceive the expansion of unregulated markets as inimical to social stability and deeply held norms. The result is severe tension between the market and social groups such as workers, pensioners, and environmentalists, with governments stuck in the middle. Ask business executives or government officials why changes to globalization are necessary, and you will hear the same mantra repeatedly: "We need to remain (or become) competitive in a global economy" (Rodrik 3). Issues (disadvantages and advantages), goals, assessment and solutions (past, present, attempted and possible hypothetical - educated/analytical solutions) of globalization will be discussed and examined throughout this reading.

An assessment of Globalization, Inequality and Culture: Nature of the Conflict

Globalization-the growing integration of economies and societies around the world - is a complex process that affects many aspects of our lives. Societies and economies around the world are becoming more integrated. Integration is the result of reduced costs of transport, lower trade barriers, faster communication of ideas, rising capital flows, and intensifying pressure for migration. Integration - or "globalization" - has generated anxieties about rising inequality, shifting power, and cultural uniformity. Globalization accounted for more than half of the rising inequality in rich, labor-scarce countries (e.g., the United States, Argentina, and Australia) and for a little more than a quarter of the falling inequality in poor, labor-abundant countries (e.g., Sweden, Denmark, and Ireland) (Pizzuti 158). Globalization has a major impact on wealth's distribution because of its own characteristics and the context in which it happens. Globalization is only internationalization of trade - it is also implies free capital transfers. Globalization is not only free trade among developed countries - it is also implies a free trade with developing countries. Globalization, as we have been experiencing it along the last decades, has been happening in a context of deep influence of the financial markets. Such a context contributes to create very brutal capital flows, which exacerbates inequalities. "It has also been happening in a context of sudden and rapid technological changes" (Franzini 159). There are not only theories and plausible assertions, but also facts, which show that globalization exerts a strong impact on inequalities by the conjunction of sudden capital flows and quick technological changes.

There are some evidence that globalization has two effects on the developing economies and causes capitalism and equality of power, wealth and advancement to clash: (Shutt 110)

i.) It boosts their growth. For example, from 1965 to 1995, the real revenue per capita in the Asian new industrialized countries has been multiplied by seven. As a comparison, from 1973 to 1995, the nominal revenue per capita in the United States has been increased by one third.
ii.) It submits these economies to the market's dependency, and especially to the financial markets' dependency. We could refer to the Mexican crisis of 1994/1995, and of course, the current Asian crisis.

A widespread anxiety is that growing integration is leading to heightened inequalities within countries. Most of the globalizing developing countries have seen only small changes in household inequality, and inequality has declined in such countries as the Philippines and Malaysia (World Bank publication 5). In Latin America, due to prior extreme inequalities in educational attainment, global integration has further widened wage inequalities (World Bank publication 5). In China inequality has also risen, but the rise in Chinese inequality is far less problematic. Since the mid-1980s there has also been rapid growth in urban agglomerations; this has increased inequality as the gap between rural and urban areas has widened. If this increase in inequality in China has been the price of growth, it has paid off in terms of a massive reduction in poverty. The number of rural poor in the country declined from 250 million in 1978 to just 34 million in 1999 (World Bank publication 6).

To the contrary, the potential for global integration to reduce poverty is well illustrated by the cases of China, Uganda and Vietnam. As Vietnam has integrated it have had a large increase in per capita income and no significant change in inequality. Thus, the income of the poor has risen dramatically and the level of absolute poverty has been cut in half in 10 years. Child labor has declined and school enrollment has increased (World Bank publication 6). Vietnam's export directly provided income-earning opportunities for poor people: exports included labor-intensive products such as footwear and rice, which is produced by most low-income farmers. In Uganda also had rapid poverty reduction as they integrated with the global economy. It is efficient that Globalization clearly can be a powerful force for poverty reduction.
In addition, to inequality (with some positive attributes) distribution of wealth, globalization can both increase and reduce cultural diversity. It increases diversity as foreign cultures are introduced by power of communications, marketing, and by immigration. It reduces diversity if a foreign culture displaces local culture. Both these effects can be problematic. Globalization increases social diversity as foreign cultures enter a society and co-exist with local culture. People become aware of different lifestyles through trade. Greater cultural and ethnic diversity can make a society more dynamic, but is can also create problems. In popular perception diverse societies find it harder to cooperate and are more prone to violent conflict. The risk of violent conflict is somewhat higher if the society has one ethnic group in a majority, facing minority groups, but even this effect is quite small relative to other risk factors such as poverty.

In contrast, globalization reduces diversity because cultures differ, and the members of a culture have a strong interest in passing their own culture on to the next generation (Jeong 310). Globalization can threaten this transmission, exposing youth to different cultures through the spread of ideas, goods and advertising, and through the movement of peoples. The most likely displacement effects may be for local culture to be displaced by western culture, and in particular by American culture (World Bank publication 130). Both developing and developed countries see a danger of cultural homogenization and consequent loss of identity. The perception of the danger is real and strongly felt. Unfortunately, there is no simple answer to this concern, and it is clearly a factor in countries' decision-making concerning integration with the global economy.

It has been thoroughly illustrated that the most serious challenge in bridging the culture and economic gap for the world economy in the years past and future, lies in making globalization compatible with domestic social and political stability - or to put it even more directly, in ensuring that international economic integration does not contribute to domestic social disintegration. Because income inequality should not arguably be the prize society, or culture pays for the opportunity for the upward mobility that all (regardless of culture, beliefs and economic status) prize.

Attempted solutions and a definite solution to bridge the economic, cultural and prosperity gaps:

The Cultural Savvy Business Executive Theorem:(Harvard Business Review):

Managers trying to operate effectively in the world marketplace must first learn to deal in a very personal way with the cultural differences that provide the backdrop against which all international business dramas are played. It is still a shock for some managers to learn that the social norms drummed into them since childhood do not necessarily prevail across national boundaries. One thing we never seem to understand is that, even though we might not trust a stranger in our own town we implicitly expect others to trust us and become our friends almost immediately.

For example, Edward Hall's classic piece, "The silent Language in Overseas Business," first lays out the various cultural rules that underlie all business dealings, but which very few first-time visitors to a country understand. He creates a framework in which managers can begin to decipher which of these mores they are expected to know and which not. Hall says that if mangers can look at differences in the language of time, space, things, friends, and agreements, they can begin to understand just what it will take to develop a lasting business relationship. However, the most difficult problems mangers have with cultural adaptation, of course, is recognizing that they will never fully accomplish it that cultural biases stay with us and that a sophisticated manager will know when to use them to advantage (15-16). Therefore, posing the question, "How multinational should giant corporate executives be?

Social Responsibility Model (McAdams, Freeman, Hartman 105):

Many definitions of social responsibility have been offered and emerged due to the continued melting pot of cultures and beliefs, but no single expression has successfully embraced the full spectrum of views. Moreover, by using the term "social responsibility" in order to cease inequality and cultural cohesion to appease to profit maximization - it is meant; the intelligent and objective concern for the welfare of society that restrains individual and corporate behavior from ultimately destructive activities, no matter how immediately profitable, and leads in the direction of positive contributions to human betterment, various as the later may be defined.
According to the developer of the Social Responsibility Pyramid, Professor Archie Carroll, social responsibility begins with making a profit, the foundation on which all other social contributions necessarily rest. At the same time, the honorable corporation complies with those legal and ethical obligations that all citizens must meet. Having fulfilled those duties, the firm that seeks to be a good citizen and contribute to its own long-term best interests may also choose to engage in voluntary philanthropic efforts (in the form of money, facilities, management time, etc.) to build a better community.

Conflict Management Models

Various conflict models, strategies and tactics are often applied in order to understand, analyze and resolve conflict. In order to prevent the fatal manifestation of relative deprivation to muster and destroy cultural and society prosperity and to bridge the gap of income inequality many models have been adopted. The name a few:

(1) The Phenomenological Model: The process is in three stages; getting in to the conflict-resolution process; getting through by figuring out locations (i.e., mapping, which leads to); getting out of the conflict (Augsburger 251).
(2) The Kriesberg Model: In sum, conflicts has a tendency to complete and continue the circular motion of conflict emerges, escalates, de-escalates, terminates, and results in an outcome that becomes the basis for another conflict (Kriesberg 25).
(3) The Cyclical Conflict Model: The stages are the following concord, celebration, conciliation, confrontation, conflict and confusion (Augsburger 238)

The above have many excellent facets and remarkable aids to resolve conflict, be socially responsible and business savvy, but the flaw to those rhymes and reasons is that the conditions that encourage conflict are ignored: Periods of rapidly expanding achievement, ambiguity about relative power, invidious comparison, status inconsistency, weakening normative consensus, zero-sum thinking, communication among group members and the availability of leadership. In turn, any resolution(s) should focus on conditions that discourage conflict: Consensus about norms, lack of information about Other's attainments, Physical and psychological segregation, existence of strict status system, social mobility and physical, social barriers to communication, removal of actual or potential leadership and blocking outside support (Rubin, Pruitt, Kim 18-25).

Nash's Equilibrium theory

Applying the conditions that both encourage and discourage conflict - Nash's equilibrium theory, which has been chosen as the definite solution under the notion "if a quarrel gets too hot for you, pretends it is a game" (Augsburger 229). Hopefully one day used as an additional mechanism for resolving social, economic and cultural conflicts/issues. The ultimate goal of this effective conflict management ideology is to solve the issues that; (1) globalization providing indefinite, persistent and consistent inequalities and gaps in economies and cultures, and (2) finding a method of arbitrating games which does not involve illegitimate manipulation of utilities does take into account strategic inequalities, and has a claim to fairness; is the definitive solution. The concept could be applied and explained as follows.

Traditional game theory takes as its basic distinction that between cooperative and noncooperative games. In cooperative games, the players are assumed to be free to communicate in any way they choose before and during the game. More importantly, they are also assumed to be able to bind themselves to any agreements that may be reached during such bull sessions. In cooperative games, it obviously matters whether players are able to make payments to each other on the side in order to induce agreement to a proposal that would not otherwise be attractive. This leads to a further division of cooperative games into those in which compensation of this kind (via the exchange of side-payments) is or is not permitted. Following Von Neumann and Morgenstern (1944), it has been usual to analyze cooperative games in which compensation is admitted without an explicit study of the strategic opportunities open to the players (Binmore 43). A noncooperative game ought properly to be defined as a game that is not cooperative. More often, the terminology is used to signify a game in which agreements are never binding on the players. This leaves open the question of the extent to which the players can communicate before and during the game. Such a state of affairs is often unsatisfactory, for example, in bargaining situations it is often crucial to know when offers can be made and for how long they remain open (Binmore 43).

The Nash program calls for all games to be reduced to contests. In principle, this aim can be achieved by incorporating the informal opportunities available to the players for communication and negotiation as formal moves in a game with an expanded rule-book. The game that results from using this expanded rule-book then has to be treated as a contest because there is nothing left that the players might do that is not already taken account of in the rules. In most cases, however, the Nash program remains only an ideal at which to aspire. One has only to consider the difficulties involved in inventing formal rules that would be adequate to codify anything relevant that might take place at a pre-play bridge meeting to see why this is so. Nevertheless, contests remain the fundamental type of noncooperative games (Binmore 44).

CONCLUSION

In sum, the lack of proper and productive regulation in the advancement of globalism contributes to extreme relative deprivation, dehumanization and poverty. On the other hand, globalism does provide flourishment for emerging markets, introduction to diversity (including very contributory ideologies to all of mankind) and unprecedented communication. Applying the Nash's equilibrium theory should be considered and is compatible, because the objective of competing for productive negotiations under his theory, provides written rules and tangible(s) and visual authorities - something that was lacking in all the other above conflict management solutions previously mentioned. The lesson to be learned from all the statistics, history, examples, legitimate concerns and solutions, is that expanding the global market into a uncontrollable force of nature will not cure the problem of inequality in economies and placing restrain on cultural identities; but in stead provide an equilibrium between people and profit.

Bibliography

A World Bank Policy Research Report 2002: Globalization, Growth and Poverty: Building an Inclusive World Economy. Oxford University Press, New York, New York.

Augsburger, David W 1992: Conflict Mediation across Cultures. Westminster/John Knox Press. Louisville, Kentucky.

Franzini, M and Pizzuti, Felice 1999: Globalization, Institutions and Social Cohesion. University of Siena Press, Siena, Italy.

Harvard Business Review 1983: Managing Effectively in the World Marketplace. John Wiley & Sons, Inc. Harvard University Press, Boston, University.

Jeong, Ho-Won 1999: The New Agenda for Peace Reseach. Aldershot, England. Burlington, Vermont.

Jeong, Ho-Won 2000: Peace and Conflict Studies. Aldershot, England. Burlington, Vermont.

McAdams, Tony 1998: Law, Business, and Society 5th ed., Irwin McGraw-Hill. New York, New York.

Nash, J. 1951: "Non-cooperative games," Annals of Mathematics. Princeton, NJ. Princeton University.

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Von Neumann, J., and Morgenstern, O 1944: The Theory of Games and Economic Behavior. Princeton, NJ. Princeton University Press.
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