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Distribution of Labour and Capital in a Globalised World

Let us now go back to Dembinski’s calculations concerning ‘very big enterprises’ as it seems that it is usually private corporations who open up the path toward future development rather than bureaucrats in poorly functioning and corrupted public and state administrations in developing countries. The fact is that those 800 biggest enterprises also wield a totally dominant position regarding global flows in foreign direct investment going from the wealthy North to the poor South. The group of ‘giants’ monitored is compared to a completely different sample: a group of the poorest 144 countries. These two groups – otherwise entirely different from each other – have one thing in common: they represent equal 11% shares on the global ‘value added’ to the global product. To achieve this same product, the ‘giants’– as has already been mentioned – require 1% of the world’s economically active population, whereas the poorest 144 countries (about 2/3 of the total number of countries) require a full 1/3 of the world’s active population. The ‘giants’ however, require almost 60% of the world’s market capitalisation, whereas the poorest 144 countries are left with no more than 6% of the capital!

For the sake of objectivity, it must be noted that over the 1990s, the share of developing countries on foreign direct investment grew from 5% to 12%, and five per cent of the biggest multinational corporations have been established in developing countries.

Scenarios for the Future

The asymmetry of development regarding the primary production factors – labour and capital – shows that the focus of globalisation on growth by means of one-sided increasing of capital intensity is questionable as well as risky and institutionally fragile. Capital and labour are of no use without each other: the ageing populations in European countries and the symptoms of a crisis of the pension systems in the world’s richest country – the USA – are the most painful evidence of the fact that further development meets insuperable barriers without ‘human capital.’ That is one of the reasons why the world’s greatest minds are contemplating ‘seeking an alternative to the current practice of globalisation.’. Some conversion is needed, however, if the quest for alternatives is not to lead to a mere new ideology and hollow promises. Poverty reduction and prosperity for all require not only new institutions and new policies, but an alteration to the existing paradigm of economics as a scientific discipline. Plus a change in our hearts.

Sources

  • WB (2001). World Development Report 2000/2001: „Atacking Poverty, Washington, D. C. : World Bank,
  • IMF (1999). Debt Relief for Low-Income Countries. The Enhanced HIPC Initiative. Washington, D. C. : IMF
  • Compendium of the Social Doctrine of the Church . Pontifical Council for Justice and Peace, Libreria Editrice Vaticana, Cita del Vaticano 2004.