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Globalization has changed the world’s political and economic systems in a huge way. Globalization outlines that the once conventional, integrated and sequential national economies are no longer in existence and currently global forces dictate the political, economic and social composition of societies (Bonefeld 1). Globalization is now observed to be the new type of capitalism which transcends national interests (Bonefeld 1).
The Marxist theory which advocated for a new system of capitalism that transcends nation-states and pursues bourgeoisie across national borders seems to be what globalization enforces today. However, proponents of globalization disagree with Marxist principles because they note that bourgeoisie does not exist and instead, globalization is a new system of capitalism based on different functional aspects (Bonefeld 1). This type of system (globalization) therefore transcends an individual and leaves the working class and bourgeoisie defenseless over its forces.
However, with the advent of this new social, economic and political order, a lot of issues seem to follow its adoption. These issues characterize the politics of globalization. Key concerns encompassing these issues rest on social cohesion, environmental concerns, and poverty or wealth creation. In some aspects, globalization has solved the problems associated with unequal capital accumulation because despite the fact that it is based on class, it deals with a classless society (Bonefeld 1).
This order has even reduced human capital to a factor of production and nothing more (Bonefeld 1). However, with the advent of globalization systems, social relationships have taken a huge toll and the state has lost its grip on many facets of the society and economy. These issues and many more to a large extent constitute the politics of globalization and they are much deeper than previously thought. However, each country has its own unique sets of concerns. This study therefore carries out an analysis of globalization in Germany and the politics that surround its adoption.
Germany’s Philosophy on Globalization
The recent German elections point out the fact that many Germans are not contented with globalization (Richter 1). This fact enforces a tendency where Germans wants to cut themselves from the rest of the world by reorienting their political, social and economic systems. The German government is no different either because it seems to be expressing the wishes of its electorates. Evidence can be given of its half-hearted implementation of economic reforms in the past few years (Richter 2). In other words, the economic reforms enhanced by the government are aimed at upholding the achievements of the social market economy at the expense of global progression (Richter 2).
However, this new approach by the German government is not being embraced by the German elite who are still grappling with the effect of global competitiveness especially in entrepreneurship and business (Richter 3). Nonetheless, surprising or otherwise, many Germans believe that Germany can live as an island and operate in tranquility by adopting systems of social justice while the rest of the world sails in turbulent waters (Richter 3).
This attitude explains a fall in Germany’s position in the Globalization index where it has faired poorly in recent years when poorer countries such as Portugal and Slovenia rank higher (Richter 3). These postings show that Germany is quickly becoming very self-focused and is emphasizing more on national interests at the expense of all other factors (Dyson 50). In this manner, we can assume that Germany is still in sympathy of the mercantile system of operation because its government is very slow in flexing its policies so that the country can be strategically placed to enjoy the benefits of globalization (Richter 3).
Consequently, there is still a high sense of regulation of Germany’s policies with regards to wage rates and tax policies which leaves the country at the wayside while other countries reap the benefits of globalization. The half-hearted economic reforms the state is employing are therefore not doing much justice for the European state. This system of operation therefore supports the skeptic view of globalization and conforms to the outliers view.
Approach to Globalization and Nations’ Competitive Advantages
Germany has a poor track record of coping with the challenges of globalization (Richter 3). In this regard, it has poorly adopted globalization as part of its socio-economic systems. In fact, the emergence of new points of power and depolarization of world power does not seem like a big issue to the once powerful nation; in spite of recent research showing that the traditional competitive strength of the European nation and indeed most of other European nations is quickly being undermined by the emergence of new world centers of power such as China, India, and Brazil.
This attitude is observed because the nation has widely adopted a state capitalistic policy with its industries. However, globalization seems to be defeating this system because many of the state’s industries are quietly suffering under the pressures of globalization. For instance, the high-end processing based on engineering solutions does not stand as Germany’s area of competitiveness anymore (Richter 3).
When making comparisons to emerging economic powers in Asia, it can be noted that these new economies are not only covering economic strides because of low cost advantages but are quickly making huge profits from economies of large scale (Richter 4). At the same time, these new powers have the backing of a very productive working class population. For instance, in the coming few decades, the population of China and India alone is set to constitute approximately half of the world’s population, so one can imagine the potential these countries will have with regard to the self initiative the Asian youth have and the economic risks they are willing to take (Richter 4). These attributes are hardly found in Germany’s population (Richter 4).
Germany still lags behind in trying to review major policy areas such as wage policies, labor laws and tax systems to be in line with the new global order. In this regard, its systems remain very inefficient and subsidies given by the state are slowly starting to lack relevance (Richter 4). Complimentarily, a risk adverse attitude is still prevailing among Germany’s population and the new economic agendas the state wishes to implement can be largely perceived as a drop in the ocean.
Germany does not however stand alone with regards to slow acceptance of a globalized world because other nations such as Italy and Belgium are also following in its footsteps. Italy’s world-renowned Fiat brand collapsed because of a slow adoption of economic reforms while Italy’s government (just like Germany) is still adopting nationalistic, chauvinistic and rhetoric policies that are not in alignment with accepted globalization policies (Richter 5).
Effects of Globalization in Germany
Germany has in the recent past set a poor record in coping with globalization while the consequences for its actions are feared to become much worse in the near future. It is feared that the number of Germans working in the industrial sector is going to be at a record low of less than 10 million jobs (Richter 5). This surprisingly indicates that Germany’s past prominence in industry performance is slowly declining due to globalization. Indeed, many companies in Germany are quickly starting to outsource their jobs abroad and in fact, some are setting up new bases out of Germany.
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Germany’s industrial base is therefore slowly disappearing with the infamous culture of white coat wearing employees; car making prominence and engineering prominence associated with Germany is quickly fading by the day. Some of the country’s main companies like Volkswagen, which is a major brand in Germany is raising alarm that more than 176,000 people need to be let to go in order for the company to stay afloat amid high global competition (Richter 6).
In fact, many of Germany’s automobile plants are quickly being shut down while many more are being opened up in foreign countries. A trend is therefore coming up of many German employees rendering their services in Poland, Czech Republic, Slovakia or Hungary as the local economy gets poorer and poorer and job security becomes unguaranteed.
Apart from the Volkswagen brand, Opel, which is also another German brand, has announced in the recent past that it needs to carry out job cuts in order to stay afloat. Interestingly as major German automobile companies are making nationwide headlines; small and medium sized companies are quietly fading away and disappearing into the global melee (Richter 6).
What is therefore happening is that Germany is undergoing a huge transformation that is seeing the collapse of its core industries while others slowly emerge. Jobs are also quietly being outsourced globally. For instance, Siemens has been identified to employ more than half of its employees from overseas job markets as compared to the conventional German job market (Richter 6). This comes out of the fact that labor laws in Germany are changing very slowly when compared to the global labor potential which exists in the global market.
For example, the average wage rate per hour in Germany is 28 pounds while other regions in the world can pose wage rates of as little as one pound (Richter 6). This therefore means that when comparing the human capital costs in Germany, it is 28 times more expensive to do business in Germany than in other areas. This fact therefore explains why Germany is one of the world’s top exporters of Jobs even though it still retains its position as one of the world’s biggest exporter of goods and services (Richter 7).
The growth of Germany’s economy therefore seems to be greatly impeded by the economic puzzle created by globalization. In this manner, many of German companies are seen to be growing exponentially in other global markets while they leave the local economy to shrink. In fact, people are slowly accepting the fact that, when major German companies are posting increased growths; it is normally not within the country’s borders (Spiegel International 7). New companies are therefore being opened either in Brazil or China, which are some of the most preferred destinations by many German companies (Richter 7).
Most German companies are only starting to embrace the idea of outsourcing (Spiegel International 7). The German economy is therefore set to suffer further because as the country’s government sits back (helpless at the wild spin of global pressures), the economic destiny of the country lies in the hands of other people who are active in the global economy. A study carried out by a Munich based economist also points out that 60% of German firms sampled, reported that they were thinking of outsourcing in the next few years and about 30% of the companies sampled were already outsourcing (Spiegel International 7). This paints a bleak future for Germany.
Two scenarios can be deduced from this analysis. One, the worst-case scenario may evidence the collapse of Germany’s companies and later, a consequent collapse of its economy. A huge outsourcing tendency of Germanys’ small and medium sized companies into Asia may also be witnessed. This will involve its manufacturing plants and research and development facilities (National Research Council 32). As this trend slowly picks up, the antiquated corporate tax system in Germany will witness a change of most global headquarters shift into Asia. This will create a very bad social, economic and political outlook for Germany because its society will be impoverished and a class struggle will ensue, then later, a political implosion may be witnessed.
The second scenario may see a change of tact for Germany, where courageous politicians will take the nations’ mantle and redirect its destiny. The first approach would be to initiate social reforms so that new reforms can sustain in the long run. Such efforts can be done through the acceptance of downsizing as a means to increasing efficiency. However, the bulk of the reform agenda will lie on Germany’s commitment to take advantage of new opportunities created by globalization and to integrate the nation with the rest of the world in terms of global competitiveness (Dettke 150). In doing so, Germany may surely continue to enjoy its economic wealth and at the same time, protect the social stability it enjoys today.
Bonefeld, Werner. The Politics of Globalisation: Ideology and Critique. 2010. Web.
Dettke, Dieter. The Challenge of Globalization for Germany’s Social Democracy: A Policy Agenda for the Twenty-First Century. Berlin: Berghahn Books, 1998. Print.
Dyson, Kenneth. Germany, Europe, and the Politics of Constraint. Oxford: Oxford University Press, 2004. Print.
National Research Council. Globalization of Materials R&D: Time for a National Strategy. New York: National Academies Press, 2005. Print.
Richter, Jurgen. Germany and Globalization. 2005. Web.
Spiegel International. Goodbye ‘Made in Germany’? 2004. Web.