Poverty and inequality in the age of globalization
Journal of European Economy, Volume 6, Issue 4, December 2007, pp.352-384
|JEL: E01, E23||Full text (PDF)|
The paper examines the recent performance of the world economy using the two fundamental criteria of efficiency and equity. The common term of globalization is applied showing, on the one side, its multidimensional aspect, while on the other, its extension to different historical periods. Then the phase of the Pax Britannica is recalled, when the rules of the game essentially were the gold standard and free trade. It is compared with the contemporary Pax Americana governed by the neo-liberal Washington Consensus, which has tried to harmonize the behaviour of the main private and public actors of the recent economic evolution: transnational companies, international financial intermediaries, nation states, regional and international organizations. The «trickling down approach», which has inspired this Consensus , suggests that efficiency can drive equity to some extent, relying on market mechanisms above all. The limits of this point of view are shown, considering the empirical evidence, where the general picture of a growing world economy is accompanied by some critical remarks in terms both of inequalities between and within countries, and frequent signs of instability. A new way of thinking is, therefore, emerging at all levels, to suggest a strong and direct link between equity and efficiency; it asks for more interventionism, especially in the institutional field. In line with this trend, the paper argues in favour of creation of the World Labour Organization , more democracy and transparency in the existing international organizations, more regionalization than globalization.