Thursday, November 28, 2013

Economic Stratification - State and International

“Capitalist production, therefore, develops technology, and the combining together of various processes into a social whole, only by sapping the original sources of all wealth -- the soil and the labourer.” – Karl Marx (Capital, 1867)

“The core dynamic of the capitalist system is the accumulation process, a process in which a portion of the profits reaped through the sale of goods and services is reinvested, swelling the capital stock, incorporating new technologies in the process, and permitting larger sales and profits in the future.” –Victor D. Lippit (Capitalism,  2006)

Global economic stratification is not a random phenomenon as “stratification by class, country, gender, race and other social categories predates the contemporary rise of supraterritoriality by several generations or even many centuries” (Scholte, 235).  When considering that the basic premise of capitalism is that an entity must have capital to generate capital through reinvestment to generate further capital, it is important to recognize that “the modern history of capital dates from the creation in the 16th century of a world-embracing commerce and a world-embracing market” (Marx, Das Capital).  The origins of global economic stratification originated from the 16th century and accelerated with industrialization, first within the state and later with developed global stratification beginning with colonialism and the transatlantic slave trade.  From a historical perspective, it can be argued that the capital generated from colonial exploitation and the transatlantic slave trade was eventually consolidated through cyclic reinvestment of generated capital from those forms of colonial exploitation and reinvested in new technologies to magnify capital accumulation through exploitation and production.  As industrialization and new technologies evolved, economic stratification within the state and across the international stage was elevated because the exploited domestic capital-less working masses and exploited states had only their labor and natural resources to generate capital while the colonizing state and the private sector capitalist with means of production could continuously reinvest generated capital into new technological means of production, exploitation, and military weaponry.

As we look at domestic stratification within the United States, “By 1991 the richest 10 per cent of the US population owned 83.2 per cent of assets” (Scholte, 238).  This stratification phenomenon is not exclusive to the United States, but is a characteristic of most states with capitalist structure or tendencies.  In Russia the “richest fifth of the population saw its proportion of national income rise from 32.7 per cent in 1990 to 46.7 per cent in 1997, while the poorest fifth had its share decline over the same period from 9.8 to 6.2 per cent” and “in the early 1990s the wealthiest fifth of the population in Brazil earned 26 times as much as the poorest fifth” (Scholte, 238).

Looking at the international stage, it can also be identified that factors of capital imperialism “have since the nineteenth century highlighted a purported inequitable stratification of countries”, especially after the end of World War II and the establishment of organizations such as the World Trade Organization/GATT (WTO), the International Monetary Fund (IMF), and the World Bank  (Scholte, 242).  The Bretton Woods organizations, in correlation with the WTO/GATT, began a shift in international imperialism from state on state colonial exploitation of natural resources to the imperial private sector exploitation of so-called Lesser Developed Countries (LDCs) through private sector globalization structurally enforced and stimulated by IMF and World Bank conditional loans which open up poorer states to foreign private sector investment through extraction of domestic natural resources and exploitation of cheap labor, especially with Multinational Corporations (MNCs) profiting from lower wage requirements in poorer states in order to maximize profit by moving “manufacturing from the North to the South and the East” (Scholte, 238).

The most powerful international government organizations (IGOs) and the most capital heavy Non-Government Organizations (NGOs) also contribute to global stratification among states.  One example for this argument is “the G7 governments currently control more than 45 per cent of votes on the IMF Executive Board, while 43 governments in Africa between them control less than 5 per cent” (Scholte, 244).

What are possible solutions to economic stratification within the state and on the international stage within economic globalization?  The first thing that must be considered in the basic concept of capitalism and that is the generation, accumulation and reinvestment of capital for further capital regeneration and accumulation.  This is an exploitative concept and the system of capital generation itself goes against any true altruist relief of stratification whether on the state level or international level.  Solutions to economic stratification within individual states are much more difficult to propose and implement because it requires analysis of the history of that state.  For instance, there are racial economic divides in the modern United States due American slavery.  In order to rectify the historical economic ramifications of slavery in the U.S., some sort of redistribution of wealth would have to be implemented.  Sadly, the United States government has not even issued an apology for slavery.  As for international stratification, perhaps former imperial powers that generated capital from the exploitation of colonial possessions should be held responsible, to some extent, for the conditions of their post-colonial possessions (such as Britain to Jamaica or Italy and Britain in the case of Somalia).

With centuries of capitalism and centuries of capital regeneration through exploitation and accumulation, evolving from colonial imperialism to imperialist globalization, there really is no clear cut solution to economic inequality among the most powerful capitalist states and exploited states.  Globalization is based on capital exploitation.    


Marx, Karl.  1867.  Das Kapital: Volume One.  Accessed on November 28, 2013 from

Scholte, Jan. 2000. Globalization: a Critical Introduction. London, England: MacMillan.

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