21/11/2017 Who would benefit from globalization?

              Who would eventually benefit from globalization? Owners and managers of global enterprises would be the greatest beneficiaries. Most Americans would be better off than the status quo because globalization is almost the same as Americanization, which enlarges Americans’ various opportunities. English-speaking people would also be better off because the world’s only common language would be English, and their cultures are close to American culture.
              Most other people would be worse off than the status quo because they would not only be unable to use their mother tongue for work but also be forced to follow the American custom in many important situations. The amount of their gains from free trade would be much less than that of these losses. 
              Today’s ideology that is used to promote globalization is neoliberalism whose theoretical basis is neoclassical economics or general equilibrium theory. As I hinted in this blog on the 18th of November, general equilibrium theory has many defects. I mentioned that it assumes contract completeness, which is quite unrealistic.
I would like to add that it lacks organization theory because each firm’s technology is exogenously given there. Put differently, it does not analyze how firms should be organized or what human relations should be established within organizations. Ask any economics major how economics teaches desirable behavior within organizations. And you would not get any ‘scientific’ answers because it does not investigate the question.
This means that the general equilibrium theory considers the efficiency of markets only and ignores that of organizations. Thus, it is nothing but a partial efficiency theory. I believe organization efficiency or production efficiency is more important than market efficiency because the economy does not have much without production.
One of the most fundamental claims of neoclassical economics (general equilibrium theory) is that it applies to any economy in the world independently of cultures, which is a necessary trait of a theory for globalization. However, people's behavior within organizations is very much influenced by their own culture. Efficient human behavior in one culture is not necessarily so in another. An efficient organization structure in one culture is not necessarily so in another either. Neoclassical economics avoids this problem simply ignoring organization efficiency.
Using a fundamentally wrong theory, neoliberalism seeks for globalization and destroys almost all cultures including languages in the world. The globalized world would be an enlarged USA with a complex hierarchy of people with different ethnicity and English abilities.
Comments and questions are welcome.
Kazuhiro Arai’s Japanese blog:             https://araikazuhiro.blogspot.jp/
Kazuhiro Arai’s Japanese home page:   http://araikazuhiro.world.coocan.jp/












Comments

Post a Comment

Popular posts from this blog

The Nature of Economics (3)

Image
The Nature of Economics (3) A crucial defect of neoclassical economics related to the above discussion is that it analyzes seriously only markets, more specifically organized markets. It does not seriously analyze firms or households. It ignores government, the environment, and international relations. Although the real economy has a variety of market types, it treats all markets as the same type. Can the demand-supply analysis (with auctioneers) be applied to medical markets or education markets? This implies that neoclassical economics analyzes only a limited part of the economy. Although it deals with firms, it does not seriously analyze them in the sense that it fails to explain how a particular set of input levels achieves the level of output given by the production function. In other words, it does not describe the process of production or how production is carried out. Firms in the real economy try hard to improve their technologies. They also try to invent new products
Read more

The Nature of Economics (7)

Image
The Nature of Economics (7) Neoclassical economics does not consider efficiency of the whole economy because the production function and utility function are exogenously given. Since I do not think that this point is made clear in books or papers, I would like to discuss it in some detail. Consider two economies E1 and E2. The workers in E1 are more cooperative and hard-working. Those in E2 are selfish and lazy. Hence, the labor productivity in the firm in E1 is higher for equally given levels of physical inputs. However both economies are efficient in neoclassical economics! Both E1 and E2 are efficient as far as all firms maximize their profits subject to exogenously given (different) production functions! It is obvious that E1 is more affluent than E2. I would like to emphasize that efficiency differs from affluence in neoclassical economics. Next consider two economies E3 and E4. The people in E3 are more harmonious and other-regarding within the household. Those in E4 ar
Read more

The Nature of Economics (5)

Image
The Nature of Economics (5) We see here a good example for the fact that the values researchers possess affect their choice of the topic and method of research generating bias in ‘scientific works.’ 　 Researchers who want to support individualism do not analyze firms or households seriously. They simply introduce exogenously given production functions and utility functions. Economists tend to ignore or distort social aspects that are inconvenient to build models with conclusions they like. It is really hard to establish social sciences that are value-free. Researchers need to recognize this. On the other hand, a unified theoretical model may be formed to explain the cultural difference mentioned in the example given in the above third reason. It may be done by introducing a measure of the degree of cooperativeness as an exogenous variable. In such a model different types of equilibrium may arise for different values of the measure. If we can endogenize the variable for that m
Read more