How is the world organized economically?

The world is arranged in a way wherein countries are divided territorially, religiously, economically and politically. States are divided into geographical areas so each nation-state could have its own people, culture, traditions and resources. With the outbreak of capitalism and industrialism, the shift from being culturally focused transferred to being wealth focused. This means that countries now see the value of resources and riches that may be derived from their respective boundaries. Exchanging of goods and service or barter trade was the practice long ago. It evolved into different types of activities until it has reached where we are right now.

The Economics of how the world is organized involves several factors such as profits, the labor force or the law on demand and supply. The link between the world politics with economics has been though of ever since before. There were bright thinkers such as Adam Smith, there was also what we call the Marxist theory. Economics is everywhere in this world and as long as we live, it will always find ways to reach the highest peak of globalization.

One important approach in global politics is the liberal and neoliberal approach. The liberal tradition and its promotion by neoclassical economists associate the economy with free market policies. Assumptions such as markets are efficient and desirable practice of competitive advantage, growth will trickle down to the poor, etc were believed to occur in this free market society. Adam Smith was responsible for the "laissez-faire" principle which states that economies are self correcting in a way that government intervention is not necessary for it to function well. He promoted the free market society and thought of each individual to be responsible enough to do what is right for all.

The Marxist approach that came from Karl Marx attempts to develop and improve more structured explanations of how markets, corporations and governments should interact with society. The Marxist way takes firms seriously and detailed. Here, the company is analyzed in relation to power differentials. This theory focuses on cultures and offers research on organizational changes in the production, divisions of labor, regulation dynamics and the class and geopolitical hierarchies. Marxists believe that capital accumulation is based no only on profits derived from formal mechanisms of exchange and production but also from profits through non-capitalist means (Peterson, 2009).

Inequalities such as the gendered division of labor, the costs of exclusion, etc have been present long ago. Peterson (2009) states that the inequalities associated with production and labor did not come with neoliberalism. The hierarchies of "difference" were already institutionalized, and the difference from capitalism before and capitalism today is that now, it has the capacity to reach markets abroad, or markets beyond its reach long ago. The world has been functioning years back, and the same economic factors are still present up until now. The drive for profits and the maximization of firms are still the key components of capitalism and business owners nowadays. Inequality will not be eliminated at an instant and some problems before are still dilemmas now. However, what matters at the present is the bigger picture.

What is the bigger picture? Well, for me, what we must consider is the ability of economic concepts and practices to be present in every market nowadays. Capitalism has widely contributed to economic growth and these corporations have gone international- the ability to transact beyond its borders. The concept of International Economics is familiar to us and it is currently one of the most important economic stimulators in the world. Countries increase the exports to be competitive and to carry the products of their country. In relation to this, governments consider the foreign exchange appreciation since it hurts exporters. They have to consider imports as well. The country's trade openness is very crucial in an economy and the world is now evolving into a more advanced system where markets merge as one.

Though countries have their own boundaries, international economics plays an important role in its development. This is where globalization enters, because without the interaction and transactions with foreign markets, states will lose its way towards globalization. What I am saying here is that markets are designed to be interactive, and the more this occurs, the more globalized our world becomes, which is a great thing. Globalization involves the advancement of anything and everything. Hence, economics is taking its course towards this modernization that will benefit each and everyone of us living in earth.

Source:
Peterson, V. (2009). How is the world organized economically. Global politics: A new introduction. London: Routledge.