How has the development of Global Capitalism changed the nature of socialist economies and developing societies? (UPSC CSE Mains 2017 - Political Science and International Relations, Paper 2)
- Most of the post-colonial countries were influenced by the socialism of the USSR which promised emancipation of the oppressed by the colonisers. Almost all of them adopted some form of socialism initially, which meant a closed economy. But gradually it was realised that self-sufficiency is not possible without investment and technology as the colonies were deindustrialised and kept solely for the procurement of primary products.
- After the fall of the Soviet Union, many countries opened up their economies to bring in liberalisation, privatisation and globalisation. It was assumed that the ‘end of history’ has been reached and capitalism has won.
- Most of the socialist countries adopted capitalist tenets completely or became mixed economies. Post-colonial countries, especially ASEAN members became the success story of capitalism.
- But global capitalism has increased inequality within and amongst the countries. The world system theory explains how developing countries have remained in the periphery or the semi-periphery, and the core has only exploited first their resources and later the population in the name of cheap labour. This also harmed the growth of infant industries as they are not protected from the competition coming from already advanced industries.
- Institutions like IMF, WTO and World Bank were made to regulate and sustain capitalism. Countries had to go through structural adjustments to get loans and many countries like Cuba are kept under embargo as they do not accept global capitalism. This also came with US hegemony as it is the centre of global capitalism. And crisis emerging in the US, like the financial crisis of 2008, impacts all the developing nations.
- Global capitalism has brought the phase of ‘complex interdependence’ as suggested by Joseph Nye. All countries experience the impact of global capitalism in some manner as seen in the recent COVID-19 pandemic.
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