The free market economy or rather capitalism was developed by Engles who was one of the scholars of economics. This Ideology adopted by many if not all of the western nations upholds the private ownership of business and institutions and the owners of these entities are allowed to spread out as much as they possibly can in order to plough in as much profit as they can.
This in the long run has facilitated the quick spread of globalization as the investors seek more business opportunities across borders. It is due to the globalization trend that the adverse effects of the economic crisis found its way to the poor nations.
There has however deepening inequalities between the wealthy nations who have huge multinationals investing in the developed world and the third world. An example being California having a Gross Domestic Product equal to that of India and China combined. In addition to this, the combined GDP of sub-Saharan Africa is much less than that of the world’s richest fifteen people. All these perils can be accounted to the spread of capitalism.
The third world nations according to are rich in resources but its people live in abject poverty. Day in day out transferred to the elites in both not North America and Europe form the poor third world nations.
This has been done in various ways such as payment of poverty wages and obligatory importation of finished products which more often than not are sold at highly inflated prices. As a result, the poor nation has its freedom of trade and the opportunity to develop its own markets, industrial capacity and natural resources constrained hence the development of neo colonialism.
Capitalism and globalization have opened up avenues where investors look for nations where they can pay the lowest wages, lowest taxes, where works have zero or nonexistent benefits which is as a result of weal labor unions.
Therefore the most attractive offer has always been the third world nations which in has led to a 50% profit rate in the United States Corporate. A good example being the citi bank group which is one of the U.S largest firms, earns over 75% of its profits from operations overseas.
The principles of capitalism have therefore led to the growth and rapid development of multinationals organizations such as the General motors and the Coca cola group among others. These organizations have factories in a good number of nations to reduce the risks if for instance, there is political instability in one nation, and then the factories in other nations will cover the costs. For example General Motors’ factories are located in Nigeria, Singapore and South Africa among other nations.
It sometimes plays out the workers in one nation against the other in order to suppress the possibility of any form of unionization that may lead to the demand for more benefits from the workers. This in other words leads to low cost of production for these multinationals while the profits are skyrocketing for the elite few.
The economic meltdown experience from 2007 adversely affected the developing nations. Given that a good percentage of the wageworkers in the multinational originations were third world employees, most of them had to be retrenched in the name of cutting costs.
It is however a saddening fact that, the top managers of these companies did not have their salaries touched a single bit. The retrenchment of these workers led to an increase in the unemployment rate hence a huge rise in crime. In addition to these the management posts in these organizations are not open to the qualified third world natives hence it is not a wonder to get a University graduate who is a criminal; case in study Nigeria.
In turn, this leads to congested jails for instance in South Africa. The number of cases that have to be dealt with in the different courts of law across a particular third world nation has overwhelmed the courts to the extent some petty crime offenders have to stay longer in jail.
Such individuals however end up providing cheap unpaid labor to the multinational factories that are often located near these correctional facilities. It is ironic therefore that most of these capitalist governments as well as corporations seem to enjoy the benefits of congested jails.
It is important to recognize that after the first economic meltdown, there was the development of the Structural Adjustment Programs which as claimed by the western world was meant to cushion the third world nations against the effects. These SAPs as they are commonly known are in the real sense meant to limit the economic self-independence of these nations. For instance they require that the regulations for foreign investors be reduced this is only beneficial to the western capitalist investors who would go out of their way to produce at the lowest costs possible.
In a nutshell, Capitalism has and will always favor the western elites. It is however unfortunate that communism is currently diminishing even in the Asian nations such as Japan and china who are trying to implement a cocktail of the two. On the other hand, the third world nations should not sit back and blame their poverty on the developed world instead they should concentrate on mending the sectors that affect their growth and development. Case in study is Singapore grew from a nation with a lot of nothing in terms of resources to a self-sustainable nation.