The Emergence of the Global Economy

Over the past fifty years the process of globalization has entered a new and different phase. A global economy has started to evolve. In its essence the global economy is simple, the creation of a global market and the integration of peoples and all communities into this market. Global trade involved the exchange of goods between regional markets. In the global economy all labor, goods and services will be bought and sold on the global market.

We can readily see some effects of the global economy. The price we pay for a sack of flour in Kansas or a gallon gasoline in Texas is already determined in large part by the world price for wheat and oil. Similarly the price we pay in Detroit for a Ford is no longer solely influenced by competition from General Motors, but by oversea auto manufacturers as well. Foreign imports not only place American companies in competition with foreign companies, but also put American workers in direct competition with their foreign counterparts. American farmers, oil producers, businesspeople and workers are now finding that hey have to compete on a global market for the prices they can charge for their goods and labor. This has both good and bad points. It has resulted in cheaper prices in the United States for man manufactured goods. However, it has also meant the loss of jobs, as companies, in order to compete, are closing their domestic manufacturing plants and laying off their relatively high paid American workers, building new plants overseas staffed by low paid foreign workers and importing the products back to the United States for sale. As a result many American companies are no longer producing the products they sell in the United States.

Many scholars argue that the global economy differs qualitatively from global trade in that implicit in the global economy is an underlying and unifying ideology, capitalism, and a single objective, the production of wealth. Capitalism is an ideology based on Western (European) cultural beliefs and values. For a people to survive, let alone prosper, in the new emerging global economy, they have to adopt Western cultural ideas. Thus it is that the global economy is not merely resulting in the restructuring of the world economic system, but is having far ranging cultural and social consequences for the people's of the world as well. In earlier chapters we have highlighted in special boxes many of the potential cultural implications of the global economy. In the last part of this chapter we are going to discuss the development of the global economy and the some of the other social and economic problems, which are becoming evident.