University GPE Report: Theories, Wages, and Globalization Analysis

This report provides a critical analysis of International Political Economy (IPE) theories, including Marxism, neoliberal policies, and capitalism, as they relate to global wage structures and the impact of globalization. The report examines the theoretical attributes contributing to low wages, particularly in the context of Walmart, and explores the interplay between capitalism and low-wage labor. It delves into Marxist perspectives on economic regulations, capital accumulation, and the implications of these factors on wage disparities. Furthermore, the report proposes various strategies for improving wages within capitalist economies, such as increasing the minimum wage, adjusting economic policies to favor low-wage workers, and encouraging policies that prioritize full employment. The analysis considers the effects of globalization and international trade on wage inequality, offering insights into how these factors influence labor markets and economic outcomes. Overall, the report offers a comprehensive overview of the complex relationship between political economy, wages, and globalization, along with potential policy interventions to address wage stagnation and inequality.

Running head: GLOBAL POLITICAL ECONOMY
Global Political Economy
University Name
Student Name
Authors’ Note

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Table of Contents
Question 1..................................................................................................................................2
Solution to 1.1............................................................................................................................2
Solution to 1.2............................................................................................................................7
Question 2................................................................................................................................10
Solution to 2.1..........................................................................................................................10
Question 3................................................................................................................................13
Solution to 3.1..........................................................................................................................13
Solution to 3.2..........................................................................................................................14
Question 4................................................................................................................................16
Solution to 4.1..........................................................................................................................16
Solution to 4.2..........................................................................................................................17
References................................................................................................................................19

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Question 1
Solution to 1.1
Critical analysis of IPE theories mentioned in the case
The International Political Theories that are mentioned in the given case include Neoliberal
policies, low wage labour and capitalism theory, Marxism theory.
Marxism Theory:
As rightly indicated by Germain (2016), Marxist theory helps in delivering deep insight at the
time of seeking to illustrate the political economy and the decisions of policymakers. The
foundation of the Marxist critique of capitalism is that essentially capitalism would not
succeed for various economic causes since the proletariat revolted against its economic
failure. From this stated destruction, the social construct shall prevail as capitalism implants
the seed of its own ruin. Germain (2016) suggests that there are three rules of Marxist Law,
that Karl Marx illustrates as economic regulations. Essentially, these regulations support the
theory of an unsupportable economic as well as political system under the regime of the
capitalist arrangement. Communist Russian radical, Vladimir Lenin, however introduced
fourth regulations later on. In essence, the economic regulations of particularly Marxism are
relevant and even prophetic to a contemporary day challenger of liberal theory and never-
ending push for globalization.
The first regulation, that is a law for disproportion mentions that in the process of pursuit of
capital gains and accumulation of capital, capitalist economies have the tendency to over
produce specific types of goods. In particular, this will cause an imbalance in the area of
observation of wage an earner earns need to buy the overproduced goods. Cohen (2017)

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recommends that Marx posits that this “disproportionality existing between production and
consumption owing to the anarchy of the market creates periodic depressions as well as
economic movements. As rightly put forward by Cohen (2017), Marxist supporters can
necessarily examine majority of the current global economic crisis to support their opinions.
Plentiful, cheap capital blew up the value of and promoted the construction and investment of
housing. In itself, these asset bubbles were evident in nations namely the United States, the
United Kingdom as well as Spain. In particular, this market bubble generated an
overproduction in the area of housing, directing the way towards the world economy to the
precipice of economic ruin.
The second law of Marx mentions that the directive of capital accumulation and
concentration among wealthy capital class indicates towards the ever-escalating requirement
for enhancement of efficiency and eradicate risk of investment. Burton and Wurfel (2016)
suggest that Marx theorized that unfettered capitalism would push enhancing concentrations
of wealth in the hands of effectual few and rising impoverishment of the many. As rightly put
forward by Obeng-Odoom (2015), as labour wages decrease, the proletariat class shall initiate
conflict with demands for a social revolution.
The third regulation of capitalism as per Marx mentions that as capital accumulates and
becomes more abundant, the return rate decreases, thereby decreasing the incentive to invest.
During the past overturn the United States assumed the Keynesian notion of economics by
accumulating debt and flooding the entire market with cheap capital (Oatley 2015).
The final law contributed by Lenin mentions that as capitalist economies become matured
with accumulation of capital, and as rates of profit decline, the capital economies become
compelled to seize colonies. In essence, this generates dependencies to serve particularly as a
market, outlets of investment generate sources of food as well as raw materials. Supporters of

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particularly Marxists theory highlight colonialism, mercantilism and neo-colonialist
movements that have exploited less developed nations with various immature economies.
Low wage labour and capitalism
The potential force comprise of masses of unorganized workforce, the under-employed as
well as unemployed struggling to continue to exist. The given case study also talks about low
wage labour and capitalism. With corporate capitalist economy falling apart, there are some
individuals who view socialism with a comparatively less jaundiced eye (Oatley 2015).
Certainly, there are banksters as well as other corporate cutthroats. Essentially, there is
Marxist theory that delivers an excellent analytical tool for illustrating overall failure of
globalized capitalism to offer a decent way of life for the people of the whole world.
as correctly put forward by Jäger and Springler (2015), capitalism is an economic as well as
political system in which a nation’s trade as well as industry are controlled by particularly
private owners for the sake of profit.
Crisis of capitalist
Capitalists are necessarily in competition with one another and they are necessarily driven to
invest in particular technology to leave behind the rivals (Alonso-Fradejas et al. 2016)
Explanation of theoretical attributes accountable for low wages in Walmart
The theoretical attributes accountable for low wages in Walmart can be elucidated in detail in
this section. As there is an ever widening income gap between both rich and poor, there is an
increasing suspicion that the entire game in this frantic modern economy is titled against
working population. Again, there is widely shared prosperity during the time period 1950s.
This is the time when American Dream seemed open and starting to appear as a historical
anomaly (Oatley 2015). Karl Marx claimed that increasing inequality can be said to be

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inherent to the policy of capitalism as the capitalists and financiers who supply financial
capital to businesses in return for equity acquire financial capital to businesses in exchange
for equity. This necessarily leads to acquirement of larger share of the pie (Obeng-Odoom
2015). Again, in other words, there are individuals who own diverse means of production
such as factories, offices as well as machines and many others that economists refer to as
“capital inputs”. These help them in getting richer while those operating stiff gets stiffed.
Piketty presented data that it is unlike to that of Karl Marx. This reflected that overall share of
national income that is Gross Domestic product that passed on to the owners of capital
increased while share of the labour (that is wages as well as salaries) decreased (Neilson et al.
2014). A general explanation for the observed trend is that U.S corporations have invested
hugely in areas of technology as well as automation- necessarily replacing human workers in
the processes of production with excessive capital. Furthermore, industries that still have the
necessity of lot of manual labour have outsourced much of the production to nations with
lower amount of wages (Cohen 2017).
Walmart wages were extremely low, however the issue of low wages cannot be considered to
be something new for particularly a capitalist economy such as USA. Essentially, since the
period of introduction of wage labour during the 19th century, there have been contentious
discussions and often passionate struggles for employees to acquire higher earnings. An
important development was the initiation of the minimum wage (Germain 2016). In essence,
this was meant to make certain that everyone who operated necessarily received a basic
earning that could help in sustenance. In particular, this was specifically observed as a
necessary step during the Great Depression at the time when there was essentially mass
unemployment (Hettne 2016). Nonetheless, this represents a troubling reality of the entire
labour market and that without government rules and collective bargaining, employers can

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utilize competition to lessen the wages. Nevertheless, there are also arguments that these
dimensions enumerate stifle rate of growth of job (Rupert and Smith 2016).

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In the end, it can be hereby said that decreasing wages in Walmart might be due to recession
that causes unemployment and a downward thrust on wages. In addition to this, there is a
decrease in trade union membership and increased labour market flexibility such as higher
zero hour contracts, novel gig economy and restricted bargaining power of workforce
(Glasgow and Schrecker 2016). Walmart requires low skilled workers which were in
abundance in the USA market. The increase in supply of low skilled workers for Walmart
decreased the demand of the workers and subsequently the level of wages (Gilpin 2016).
Solution to 1.2
Proposal of various ways for improvement of wages in capitalist economies in the face of
rapid globalization
Various ways for enhancement of wages in the capitalist economies in the wake of
globalization include the following:
Studies conducted by reveal that increasing the minimum wage increase productivity of
workers. It can be found that employee motivation as well as ethic enhance at the time when
employees are given a fair wage. Business executives in capitalist economies such as United
States also support higher level of minimum wage (Ravenhill 2017). Because the federal
minimum wage is also expected to stimulate meaning of consumers and help bottom lines of
businesses, subsequently help the economy to grow. Fundamentally enhancement would
augment productivity of workers and lessen turnover of employees and absenteeism. As such,
it is expected to boost the entire economy by increased demand of consumers. Survey
conducted in the recent times by Republican Pollster Frank Luntz observed that 80% of
business executives were in favour of enhancing the minimum wage (Cohn 2015). As which
wage suppression arises from International policies, it can be reversed by developing

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different choices of policies. In order to boost in capitalist economy such as America,
policymakers can consciously tilt the power of bargaining towards low as well as moderate
wage workers (Vinokurov and Libman 2014).
Set of policies that has necessarily stifled growth of wage rate are specific aggregate factors
that directed the way towards excessive unemployment. In this regard it can be said that
policymakers can assist in the process of delivering shared growth of wage by means of
monetary as well as budgetary policies that necessarily prioritises full employment
(Vinokurov and Libman 2014). This can tightening of the labour market and employers will
have to pay higher wages in order to get and retain the workers that they require.
Fundamentally the policies can assist creation of jobs and attainment of full employment take
in maintaining rates of interest and keeping it unchanged till growth of wage, enacting
various employment programmes directed towards hard-hit societies (Cavusgil et al. 2014).
In addition to this, policies can also be made to increase investment in areas of transportation,
research and development, education, broadband and reduction of trade deficit (Cavusgil et
al. 2014).
In the wake of globalisation it can be said that free trade is necessarily advantageous to all
nations. Trade economics such as Paul Krugman, Robert Lawrwnce and many others who
disapprove that global forces and globalisation have a role to play in exploding in equality of
wages (Francis 2016). As per their opinion, international trade mainly takes place based on
comparative advantage (Florensa et al. 2015). Exporting various goods that developed
capitalist nations are comparatively more efficient at manufacturing, whilst importing goods
comparatively less efficient at manufacturing bring comparative advantage. Going by this
logic, said that developed capitalist economy would necessarily specialise in exporting goods
that have the need for huge amount of skilled labour as well as hi tech equipment (Krapohl et
al. 2014). On the other hand It would import goods that would require relatively greater

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amounts of unskilled labour, chiefly from developing nations. Theory of comparative
advantage admits the fact certain groups will acquire benefit at the cost of others. For
developed capitalist economy such as USA, there will be an increase in demand for high
skilled labour as well as owners of various hi tech equipment. On the other hand there will be
a decrease in demand for less skilled labour. Subsequently this will increase the wages of
high skilled labours along with profits of business owners while decreasing wages of less
skilled workforce (Appendini and Bislev 2016).
However, there are policies that can help in achieving full employment. The most economic
policy is to allow growth in wage rate to match gains in productivity. Apex Bank can
determine the scale as well as pace at which it increases rate of interest (Body-Gendrot and
Martiniello 2016). However the decision to increase rates of interest is necessary to slow
down the economy and at the same weaken growth in job as well as wage.
Targeted programs of employment
As rightly put forward by Niemann and Ioannou (2015), there are communities that suffer
from substantial amount of unemployment, particularly low wage workers. To obtain full
employment, undertaken that can direct creation of jobs in areas of higher level of
unemployment. Tool for this is necessary the public as well as non profit programs of
employment that can create jobs by satisfying unmet needs (Sannwald and Stohler 2015).
Public investment and development of infrastructure
Liepmann (2017) recommends that there is widespread agreement the considerable shortfall
of particularly public investment in areas of transportation, education, research and
development among many others. Undertaking a program for public investment can generate
jobs and at the same time increase productivity and rate of growth (Baier et al. 2014). Earlier,

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type of programs would have created jobs if business concerns borrowed to fund it. However
as we approach full employment revenue can be raised to cover the costs. However these way
budgetary policies can prove to be a tool to permit us to raise productivity and reach towards
full employment (Mosco 2014).
Reduction of Trade deficit
Trade deficit represents large deduction in Gross Domestic Product and employment level.
By means of making comparatively cheaper and exports of developed capitalist economies
more expensive, manipulation of currency can inflate the deficit in trade and direct towards
huge losses of jobs. Eradicating currency manipulation increasing GDP and create more jobs
(Gilpin 2016)
Question 2
Solution to 2.1
Evaluation of contention that globalization is “the golden path that connects and lifts
the diverse global community to the next level of prosperity
As mentioned in the given case by Wolfgang Lehmacher, globalization can considered to be
a multidimensional concept, the interrelatedness, interdependence, assimilation of cultures
individuals as well as market. The emergence and development of the world net of different
tsunamis of the nation has introduced diverse perspectives with prosperity to nations’
business conference as well as individuals. Even though the flows of trade are transforming
and the overall growth rate has slowed after the worldwide financial crisis, it is the
connectivity which can be regarded as the important driver of modern life (Hull 2017). The
current article also talks about the fact that borders cannot always be regarded as barriers.

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After the 9/11 attacks, protect their citizens by increasing barriers particularly at the borders.
This practice has good intentions but has risks of burdening the entire nation and excluding
financiers, manufacturers, consumers together with various brands from numerous benefits
generated by worldwide trade practices and globalisation (Lo and Hiscock 2014). Further,
article explains about small businesses having Global goals. The article presents the view that
not only transnational companies are probable to specific regulation, but also small business
units employees as well as consumers unitedly put effort to maintain to various resources,
products as well as customers in digital worldwide market. This given article also
emphasizes that the fact that and globalisation necessarily presents global Solutions to
various Global problems. In this regard article points out that there are serious concerns
regarding the effect of industrialisation and resource consumption and the fate of
environment (Jäger and Springler 2015). There is need to act responsibly to preserve and
protect the planet from environmental degradation. Therefore the entire world requires the
cross-disciplinary as well as cross industry endeavour to act swiftly and collectively, keeping
in mind various environmental threats. For this there is need to strengthen platforms
particularly for collaboration and influence on multinational corporations and governments,
as well as business units to design worldwide frameworks as well as mechanisms (Baiman et
al. 2015). This given article thereby concludes that globalisation is an ongoing accountability
management of conventions as well as national codes and economies (Alonso-Fradejas et al.
2016).
There are different perspectives of various proponents as well as critics regarding
globalisation (Oatley 2015). There are many Scholars who are of the view that globalisation
about long term growth prospects for different sections of the society, while there are
different set of scholars who lay stress on dislocations of economic alteration by globalisation
during the short term. Real variances in viewpoint persist with respect to different