Part 4

Global Stratification

Global stratification refers to the unequal distribution of resources between nations.  One way of measuring global stratification is by looking at a nation’s per capita Gross Domestic Product (GDP per capita). This is calculated by adding up the total volume of goods and services sold in a nation divided by its population. The United States has one of the higher GDP’s per capita. But GDP is not always the most accurate means of comparing global inequality. Many nations do not use cash as a form of exchange and those who do, have different standards of living and different values for currency.

High Income Nations:          GDP per capita

United States                           $34,320
Norway                                   $29,620
Sweden                                   $24,180
Australia                                  $25,370
Canada                                                $27,130
Japan                                       $25,130

United Kingdom                     $24,160
France                                     $23,990
South Korea                            $15,090

Middle Income Nations:       GDP per capita

Poland                                     $9,450
Lithuania                                 $8,470
Russian Federation                  $7,100
Ukraine                                   $4,350
Mexico                                    $8,430
Brazil                                       $7,360
Venezuela                                $5,670
Iran                                          $6,000
China                                       $4,020

Low Income Nations:           GDP per capita

Bolivia                                     $2,300
Haiti                                        $1,860
Bangladesh                              $1,610
Pakistan                                   $1,890
Guinea                                     $1,960
Ethiopia                                   $810
Sierra Leone                            $470

In 1994, the North American Free Trade Agreement (NAFTA) was established with the goals of eliminating tariffs and creating a system of free trade between the nations of Mexico, the United States, and Canada. Who has benefited the most from this trade policy? Although NAFTA excludes protections for workers and the environment, it has been highly profitable for capitalists. Heavily subsidized agribusiness in the United States and Canada has forced many small-scale Mexican farmers out of business. As a result, over 1 million Mexican farmers have been forced off of their lands. These farms have been replaced by large-scale agribusiness mostly owned by foreign companies. As a result, there are fewer jobs in agriculture, because these businesses are more likely to use machines and other forms of high tech equipment.

Many U.S. factories have closed down as well. They are relocated in “free trade zones” along the Mexican border. Known as maquiladoras, these factories hire mostly young Mexican women who work for as little as 50 cents an hour, some working as much as 75 hours a week. While some of the factories have taken an interest in workers’ rights, many have refused to do so and because there are no laws or protections for workers in these regions, there is no motivation for them to do so. Many argue that NAFTA has the potential to benefit workers as well as capitalists. However, in the 12 years it has been established, the capitalists are benefiting the most while Americans have lost manufacturing jobs, and Mexican women are working in sweatshop conditions with little hope for improvement. Wages in Mexico are less than they were prior to 1994, and the minimum wage buys less than it did before NAFTA. Many have argued that the changes brought about by NAFTA have caused the amount of illegal migration into the United States to increase. Patterns of migration seem to support this argument (see chart below).

One of the arguments for NAFTA and globalization is that Mexico is in the early stages of modernization. As industrialization took place in the United States, factory workers were paid low wages and had few protections from the government. However, as workers formed unions demanding better pay and working conditions, factory owners eventually gave into their demands. Some argue that this same pattern will occur in Mexico and other parts of the world undergoing industrialization and modernization. One factor that contradicts this argument, however, is that most of the factories along the Mexican-U.S. border are foreign owned. When workers begin to demand higher wages from employers, they simply close the factory and move to another free trade zone or border town. Also, unlike industrialization in the United States, the Mexican economy does not stand to profit as much from the newly emerging industry due to the fact that most of the products made in the maquiladoras are shipped back to the U.S. and other high income nations to be sold to consumers who can actually afford them. Dependency theorists assert that what has resulted from the North American Free Trade Agreement is Mexico’s dependency on foreign investment and a cycle of poverty and underdevelopment due to their inability to profit from globalization.

Immanuel Wallerstein’s World Systems Theory claims that due to the interconnectedness of economies throughout the world, there is a single social system or unit where stratification between nations exists. This world economic system benefits some nations more than others. Wallerstein pointed to the historical significance of the global economy and the exploitation of poor nations by wealthier nations. Beginning in the sixteenth century, global capitalism was influenced by patterns of colonization. Nations such Spain, Britain, and France colonized parts of Asia, Africa, and Latin America. This resulted in a global system of trade where raw materials and goods were transported throughout the world in order to increase the wealth and prestige of wealthy nations.

Influenced by the ideas of Marx, Wallerstein suggests that a nation’s mode of incorporation into the modern world system determines their place in the world economic system. In other words, global stratification is similar to a class system where a nation’s place in the world economy depends on their relationship to the global division of labor. He divided the modern world system into three classes:

  1. Core Nations.  Wealthy nations that are dominant capitalist economies which control and exploit poorer nations. These nations have stable governments, and very little class conflict because they are wealthy enough to offer a higher standard of living and pay their workers decent wages. These nations enjoy a large middle class and are democracies.
  2. Semi-Peripheral Nations.  Middle income nations that are undergoing the process of modernization and who often exploit the poorer nations as well. These nations have more diversified economies and more specialization.
  3. Peripheral Nations. Low income nations who are dependent on wealthier nations for foreign aid and investment. These nations have little or no industrialization and uneven patterns of development. They also have repressive, unstable governments, extreme poverty, and typically rely on the sale of raw materials such as timber, food, or petroleum.

Peripheral nations are dependent on market forces which often set the price of raw materials so low they become dependent on foreign aid and have usually incurred extreme amounts of debt from other nations. This creates a cycle of dependency and underdevelopment. Unfortunately, foreign aid often falls into the hands of corrupt leaders who have little interest in helping the people of the nation. Also, nations that are heavily indebted are usually forced to lift trade barriers and open their economies to foreign investment. This is sometimes referred to as a form of new colonialism or neocolonialism where nations are controlled economically rather than politically or militarily. Nations where extreme poverty exists today (Sub-Saharan Africa, Southeast Asia and parts of Latina America) are most severely affected by these structural adjustment programs.

 

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