62 results
Modernism without Modernity: The Rise of Modernist Architecture in Mexico, Brazil, and Argentina, 1890-1940
- Mauro F. Guillén
-
- Journal:
- Latin American Research Review / Volume 39 / Issue 2 / June 2004
- Published online by Cambridge University Press:
- 05 October 2022, pp. 6-34
-
- Article
-
- You have access Access
- Export citation
-
Why did machine-age modernist architecture diffuse to Latin America so quickly after its rise in Continental Europe during the 1910s and 1920s? Why was it a more successful movement in relatively backward Brazil and Mexico than in more affluent and industrialized Argentina? After reviewing the historical development of architectural modernism in these three countries, several explanations are tested against the comparative evidence. Standards of living, industrialization, sociopolitical upheaval, and the absence of working-class consumerism are found to be limited as explanations. As in Europe, Modernism diffused to Latin America thanks to state patronage and the professionalization of architects following an engineering model.
List of illustrations
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp vi-vii
-
- Chapter
- Export citation
Contents
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp v-v
-
- Chapter
- Export citation
Index
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp 218-223
-
- Chapter
- Export citation
9 - Development, institutions, and entrepreneurship
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp 120-135
-
- Chapter
- Export citation
-
Summary
Economic development was once seen as a process mainly driven by the alignment of a country's natural and labor endowments with the map of relative comparative advantage prevalent in the global economy. Thus, developing countries were routinely advised that the road to development entailed taking advantage of natural resources and cheap labor, making investments in infrastructure, and looking for ways to differentiate themselves in the global marketplace. Governments wanted to stage a largescale transformation of the economy and the society, including the abandonment of traditional values in favor of modern ones, the development of cities, and investments in new types of industrial activities, typically capital-intensive ones. Different countries, however, took different paths to accelerate economic growth, including inward-looking industrialization based on import substitution and export-led growth with a protected domestic market to enable firms to become more sophisticated over time (Amsden 1989; Gilpin 1987; Guillén 2001; Haggard 1990).
During the 1980s and 1990s – in the wake of the oil crises and the sovereign debt defaults in the developing world – a new policy toolkit emerged at the IMF and the World Bank focused on the idea of free markets. It was dubbed the “Washington Consensus.” The list of policy prescriptions became longer and more focused on the business sector and on a retreat of the state from the economy. Fiscal discipline, financial liberalization, openness to trade and investment, privatization, deregulation, and protection of property rights were presented as necessary to create the foundations for sustained economic growth (Rodrik 2006). Many countries, out of their own volition or as an imposition of the IMF, adopted privatization policies (Henisz et al. 2005).
The lackluster results of these policies in Latin America and Africa led development theorists and policymakers to enlarge the agenda to include an even more sweeping list of necessary reforms, including corporate governance, labor market flexibility, independent central banks, and anti-corruption measures, among others. This “augmented” Washington Consensus, while theoretically on target, placed too much emphasis on eliminating inefficiencies and on the virtues of free financial flows without seriously considering dynamic innovation as the engine of growth (Rodrik 2006).
Preface
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp ix-x
-
- Chapter
- Export citation
-
Summary
Saying that the world is changing fast has become part of the conventional wisdom. Changes affecting us are not only faster, but more difficult to predict, and of greater economic and political significance. From the economy to politics, and from culture to the environment, the global situation created during the first decade of the twenty-first century is drastically different from the one inherited from the twentieth century. We are overwhelmed by the systemic interactions among economic, business, political, social, demographic, environmental, and geopolitical variables. We are concerned about the consequences of these changes and eager to find new ways of framing and solving the problems they have brought us.
We decided to write this book so as to better understand ourselves the nature and consequences of large-scale changes and to help others understand them. We are interested not just in trends and events but in turning points, that is, veritable game changers, inflexions that have transformed human societies as we knew them. The rise of the emerging economies, population aging, urbanization, governmental gridlock and the breakdown of state authority, deepening inequalities, environmental degradation, and the reconfiguration of global power relationships have created a new set of constraints and opportunities that will shape the world for decades to come. In this second, expanded edition we also analyze the rise of the global middle class, the transformative power of technology, the institutions of economic development, and the trials and tribulations of the financial system.
Our main audience is decision makers, from the ordinary citizen who needs to figure out how to balance consumption and saving, or whether to invest more in education or not, to the business leaders and policymakers making big decisions that affect millions of people. We offer them an accessible, yet sophisticated, analysis of major global turning points and future scenarios with an emphasis on actionable issues.
This book is based on years of research and writing on current global issues. Both authors are frequent contributors to public debates in Europe and the United States. We are both academics, but with extensive experience in the private sector as entrepreneurs, consultants, and advisors. In the book we deploy the tools of economics, sociology, and political science to provide an analytical perspective on the big problems and opportunities facing the world in the twenty-first century.
References
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp 198-217
-
- Chapter
- Export citation
10 - The quest for sustainability
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp 136-148
-
- Chapter
- Export citation
-
Summary
At a time when the most pressing priority has to do with accelerating economic growth so that unemployment recedes, one runs the risk of relegating the long term to the background. The ways in which we generate economic growth and well-being in the short term, however, are intimately linked to our ability to keep the momentum going over the long run. It is not always easy to make temporal perspectives compatible and complementary. Indeed, it is very hard to establish priorities and to distinguish between what is important and what is urgent. It is at the intersection of these treacherous cross-currents that the concept of sustainability lies.
From an economic point of view, sustainability has to do with ensuring that satisfying present needs does not come at the expense of doing so in the future. This idea concocts social and political dimensions as well because sustainability involves delicate inter-generational trade-offs. Thus, the concept of sustainability – the sustainable development of human societies – goes well beyond the concerns about energy, natural resources, and the environment supporting life on the planet to include all aspects of social, economic, and political life insofar as present actions may place limitations on future actions. Thus, pension schemes, educational programs, the banking system, and political regimes have varying degrees of sustainability built into them. Having covered some of these broader concerns in Chapters 2, 5, and 6, in this chapter we will focus on the challenges of global warming, energy, food, and water, and on the opportunities they represent for business (Matthew 2012; Waughray 2011; WWF 2010).
The rise of environmental awareness
By the beginning of the twenty-first century, there was around the world a widespread perception that natural resources on Earth are finite. This is by no means a new concern. The controversial premonitions made by British political economist Thomas R. Malthus more than two hundred years ago generated a first wave of awareness. Interest in sustainability has ebbed and flowed over the last few decades, with the Club of Rome's famous 1972 report on The Limits to Growth, the oil crisis of 1973, the 1979 US National Academy of Sciences report linking greenhouse gases to global warming, and the Chernobyl nuclear accident of 1986 as major milestones igniting heated debates among experts, policymakers, and the general public.
4 - The new demography: aging, migration, and obesity
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp 39-58
-
- Chapter
- Export citation
-
Summary
The twenty-first century is riding a wave of demographic changes that will fundamentally reshape the society and the economy of most countries around the world. Population aging, the shift from the countryside to the city, international migration, lower marriage rates, and the obesity epidemic pose numerous challenges and opportunities. Unlike in previous periods of human history, highly advanced societies with relatively young populations coexist with others experiencing rapid aging. The same diversity in demographic trends is taking place among emerging and developing countries. These trends will make Africa, South Asia, and the Middle East more important demographically, precisely the areas of the world that have proved less stable politically and yet hold most of the world's exhaustible energy and mineral resources. The twenty-first century promises to match its predecessor in terms of producing new demographic trends. “We are taller, heavier, healthier, and longer lived than our ancestors; our bodies are sturdier, less susceptible to disease in early life and slower to wear out. These changes have occurred in all parts of the world and are continuing to occur” (Floud et al. 2011: 364).
Demography in the new century
The twentieth century was an eventful one from the demographic point of view. The first quarter was characterized by the final phase of the great transatlantic migration initiated in the late nineteenth century, and was followed by a quarter of demographic stagnation during the Great Depression and World War II, accentuated by war-related mortality. Massive forced migrations in Eastern Europe and the Caucasus followed. The second half of the century was one of rapid population growth due to increasing fertility and declining mortality. The world's population increased from 2.5 billion in 1950 to 6.1 in 2000. In October 2011 the United Nations announced that the seven billionth human being had been born. Contrary to Malthusian doomsday projections about the economic limits to population growth, the percentage of the population suffering from hunger dropped markedly. Another distinctive feature of the second half of the twentieth century was that cross-national migration paled by comparison to the population shift from the countryside to the cities (see the Box).
5 - From dictatorship to democracy and failed states
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp 59-75
-
- Chapter
- Export citation
-
Summary
Perhaps the most striking way in which the twenty-first century differs from its predecessor has to do with politics, state fragility, and the nature of violent conflict. The historian Eric Hobsbawm (1994) argued that the twentieth century was a “short” one, stretching only between 1914 and 1991, and was characterized by an epic confrontation between dictatorship and democracy during World War I, the interwar period, World War II, and the Cold War. In the twenty-first century, by contrast, global political dynamics are unlikely to be dominated by the extent to which individual freedoms and political rights are observed. Rather, the problem on everyone's mind will be failed states, i.e., countries in which central authority has broken down. The rise of international terrorism, the key form of violent conflict in the twenty-first century, is related to this breakdown of state authority.
Thus, in many ways the twenty-first century may end up vindicating Francis Fukuyama's famous “end of history” thesis (1989) in that liberal democracy and free markets won the battle, although the modern state as the dominant form of political organization is not uniformly effective around the world, with major implications for the global economy, global trade, and the nature of conflict. Samuel Huntington's (1993) premonitory analysis of the “clash of civilizations” seems to have become awfully descriptive of the new politics of identity and conflict in the twenty-first century, in which civil wars are less frequent than during the Cold War period, interstate wars are even rarer, and the most dangerous and lethal conflict takes the form of terrorism. Democracy, while formally the dominant form of government, does not translate into free popular participation and viable opposition in countries such as Russia, Bolivia, Venezuela, Nigeria, and Pakistan, to name but a few, mostly because of the weakness of political and social institutions (Epstein and Converse 2008). Moreover, in spite of the spread of democracy, two billion people continue to live under authoritarian regimes, especially in Africa, the Middle East, South Asia, and East Asia (see the Box).
The popular uprisings in North Africa and the Middle East that started in early 2011 represent a stark reminder that democracy has not yet triumphed around the world, and that transitions are only possible when a complex mix of economic, social, political, and geopolitical factors is in place.
6 - A disparate world: inequality and poverty
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp 76-91
-
- Chapter
- Export citation
-
Summary
One of the most intriguing pieces of news coming out of the World Economic Forum's 2011 meeting in Davos was that yawning economic disparities were identified by the global economic, financial, and business elites gathered at the idyllic Swiss mountain resort town as one of the two most significant global risks facing the world, together with failures in global governance (The Economist, January 20, 2011). Such economic disparities manifest themselves in various forms, including poverty and income and wealth inequality. Poverty has been on the decrease for the last few decades thanks to rapid growth in emerging economies, although it has increased in some countries, including both developed and developing ones. The same is generally true of income and wealth inequality. Whether you look at the data within or across countries makes a huge difference, and helps identify yet another turning point into the twenty-first century.
During the last 20 years, the forces commonly associated with globalization have produced – with only a few exceptions – greater income inequality within countries (Anand and Segal 2008: 85), something that most economists and experts do not find surprising. The news is elsewhere: inequality across countries has decreased since the turn of the twenty-first century, starting to reverse one of the most long-lasting legacies of the Industrial Revolution (Hillebrand 2008). According to a recent World Bank study, “after 20 years of mean-income divergence, GDPs per capita of the countries of the world have begun a process of convergence since 2001. This is due to the pick-up of growth in Africa, post-communist countries and Latin America. It is unclear how the global crisis will affect this process” (Milanovic 2009: 14). When taking into account the different population sizes of countries, one observes that inequality across countries has been declining since at least the early 1990s due to the China growth effect. Excluding China from the calculations, population-weighted inequality across countries started to come down in the year 2001 thanks to the high growth rates in other emerging economies, from Brazil to India and from Turkey to sub-Saharan Africa (Milanovic 2009; see also Firebaugh 2000). Figure 6.1 displays the evolution of these two indicators from 1950 to 2008.
List of tables
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp viii-viii
-
- Chapter
- Export citation
13 - Coping with uncertainty and complexity
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp 184-197
-
- Chapter
- Export citation
-
Summary
We have documented in previous chapters the key economic, sociodemographic, political, and geopolitical global turning points. Taken as a whole, these points of inflexion define the ways in which the twentyfirst century is so tantalizingly mercurial, uncertain, and complex when compared to the twentieth. Table 13.1 summarizes the turning points as well as the key drivers and consequences.
As far as the economy and business are concerned, the key turning points into the twenty-first century have to do with the rise of the emerging economies. By the end of the second decade of the new century, more than half of global output will be accounted for by emerging and developing countries. These economies are also positioning themselves as big exporters of commodities, manufactured goods, and services. This turning point is driven by differentials in growth rates for both GDP and population. A second, related turning point has to do with the fact that emerging and developing countries have come to own more than half of total foreign exchange reserves in the world, a shift fueled by their large current account surpluses. They are also blessed by historically low levels of external debt, which implies that they enjoy an unprecedented capacity to invest abroad. Emerging and developing countries have actually become a key source for the funding needs of developed economies.
These two turning points hold important consequences, including a redistribution of geo-economic power, shifts in the location and characteristics of consumer markets, a rising potential for systemic global financial disruptions as far as current account imbalances persist, and, on a more optimistic note, a reduction in poverty, assuming that the emerging economies allocate their increasingly abundant financial resources in a fruitful way.
The rise of the emerging economies has come hand in hand with the appearance of large and capable emerging-market multinationals in a variety of industries. A third of the largest firms in the world, 29 percent of the total number of multinational firms, and 29 percent of new foreign direct investment flows originate from emerging and developing economies. These firms are expanding throughout the world in search of markets, inputs, and strategic assets, especially technology and brands. Emerging-market multinationals have provoked a fundamental reshaping of competition in global industries and the formation of new hubs of decision making in the leading cities of the emerging world, from São Paulo to Dubai, Mumbai, and Shanghai.
Global Turning Points
- The Challenges for Business and Society in the 21st Century
- 2nd edition
- Mauro F. Guillén, Emilio Ontiveros
-
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016
-
- Textbook
- Export citation
-
The second edition of this popular book offers an accessible yet sophisticated analysis of the game-changing events and trends that are transforming the world beyond recognition. For the first time in human history, more people live in cities than in the countryside, and greater numbers suffer from obesity than from hunger. During the next few decades, India will become the biggest country in terms of population, China the largest in output, and the United States the richest among the major economies on a per capita income basis. Food and water shortages will likely become humankind's most important challenges. With four new chapters on the rise of the global middle class, the transformative power of technology, institutions and the entrepreneurial spirit, and the trials and tribulations of the financial system, this book provides a thorough introduction to the challenges facing business and society in the twenty-first century.
11 - The trials and tribulations of the financial system
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp 149-159
-
- Chapter
- Export citation
-
Summary
The financial system globally and within various countries has undergone massive change during the last three decades. Deregulation, liberalization, and privatization created during the 1980s and 1990s a radically new scenario. The London Big Bang of 1986 positioned the City once again as one of the world's leading financial centers. Tokyo, Shanghai, Hong Kong, Paris, Frankfurt, and Madrid also became important hubs for financial services. The financial sector's share of the economy became much larger than in the past (Philippon and Reshef 2013), something that has not tended to accelerate growth, as Raghuram Rajan, as of 2015 the Governor of the Reserve Bank of India, presciently argued before the crisis (Rajan 2005).
Then the crisis hit in 2008, and the landscape shifted in dramatic ways. The exceptional became normal. The virulence of the crisis itself – which spread globally like wildfire from a relatively small corner of US financial markets – was responsible for the greatest shakeup in financial services since the Great Depression of the 1930s. The permissive monetary policies deployed by the major central banks further contributed to creating a situation rather unprecedented, one in which liquidity is abundant, and yet many financial institutions continue to operate on the brink, requiring massive amounts of government support, especially in Europe.
At the same time, long-standing trends concerning population aging, the rise of the “digital natives,” and the proliferation of technology have taken the financial sector by storm, enabling new types of competitors to gain market share and thus exacerbating the problems of the traditional financial institutions, especially deposit-taking banks (Berges et al. 2014). The financial sector of the economy is engaged in a tedious process of deleveraging while the global economy continues to grow slowly, deflation sets in, and new technologies and companies threaten its very existence.
The crisis and its impact
The financial sector has changed beyond recognition. The crisis has had one major effect, which is the greater scrutiny which every financial company will be subject to in the future. Trust in the sector has deteriorated very rapidly. The financial sector itself has become a source of uncertainty and instability for the overall global economy.
8 - The transformative power of technology
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp 108-119
-
- Chapter
- Export citation
-
Summary
Technology has become a core component of the economy, politics, culture, and daily life. It has completely reshaped social relationships, and raised expectations regarding the world's most pressing problems, including energy, poverty, and disease. Technology has fundamentally altered competition in virtually every branch of the economy, disrupting industries, displacing established firms, and creating new business models. Technology, and the knowledge that creates it, has become an instrument of power as well as human advancement. Its many applications to war have raised moral and political issues, especially after Hiroshima, biological warfare, and, more recently, drone attacks.
Technological breakthroughs have occurred at discrete points of time over human history: the control of fire, the agricultural revolution, the wheel, writing, the arch as in architecture, gunpowder, the movable type printing press, the various navigation technologies of the age of discovery, the steam engine, the railroad, the electric motor, refrigeration, artificial fibers, the incandescent lamp, radio communication, and the internal combustion engine, among many others. These inventions all took place before 1900. The rate of technological innovation has arguably accelerated and extended into virtually every field of human activity over the last century, powered by the extension of mass education, a more systematic pursuit of knowledge creation at universities, companies, and the government, and the requirements of war. The list of major breakthroughs could include the powered aircraft, antibiotics, rockets, computers, lasers, biotechnology, magnetic resonance imaging, smart phones, 3D printing, and the collaborative economy, among other developments.
Analyzing all areas of technology and their implications for the economy and the society is mission impossible. We will focus the attention on information and communications technology, artificial intelligence, and 3D printing as illustrations of the extensive ways in which our lives have already changed and will continue to change in the future. We will also review how governments promote technology, and the ways in which emerging economies are joining the group of countries at the forefront of technological development.
Information and communications technology
Perhaps no area has evolved faster and with more far-reaching implications than information and communications technology (ICT), which has come to epitomize what electronic gadgets and connectivity can do for the economy and how it can affect political and social life. Nowadays, a third of all patents have to do with this area of technology.
1 - Welcome to the twenty-first century
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp 1-7
-
- Chapter
- Export citation
-
Summary
In 2001, two momentous events shook the world. On September 11 a small group of bold terrorists mounted a series of daring attacks on the United States, and on September 17 the World Trade Organization concluded its 15-year-old membership negotiations with China. Although the world's preeminent geopolitical power had been the target of other terrorist attacks during the preceding decade, 9/11 was qualitatively different not only because of the large number of victims but also because it undermined the country's sense of security. Likewise, China's economic and financial rise had been in the making since the 1980s, but it was not until the early 2000s that the world came to the realization that Earth's most populous country would one day also become the largest economy, and that it was already the world's largest exporter and the second largest importer. Chinese exports, trade surpluses, and currency reserves soared, with the US reaching record deficits in its current account. These global imbalances set the stage for the most severe global economic and financial crisis in decades.
Welcome to the twenty-first century. The new centennial is a teenager and it has already developed its own, unique personality. This book deals with the challenges facing us in the new century. It is not one more exercise at projecting past trends into the future, but an analysis of the major global turning points confronting us, namely, the game-changing events and trends that are transforming the world beyond recognition. A series of such inflexion points has occurred over the last decade or so – and they will reshape the economic, socio-demographic, political, and geopolitical affairs for decades to come:
• The global economy is out of balance. Most of the large rich economies, with the notable exceptions of Germany and Japan, are running large trade deficits while most emerging economies are enjoying large surpluses. After two decades of intense economic growth, emerging economies now represent about half of global economic activity. Emerging economies are also flexing their financial muscle because they own two thirds of foreign exchange reserves, of which they are accumulating an additional billion dollars every day.
• Emerging-market multinational firms are expanding around the world like wildfire.
Frontmatter
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp i-iv
-
- Chapter
- Export citation
2 - A global economy out of balance
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp 8-23
-
- Chapter
- Export citation
-
Summary
From an economic point of view, the transition from the twentieth to the twenty-first century took place in the midst of growing trade and financial interrelationships among countries, and the widespread impact of information and telecommunication technologies. Another important development was an increasing cross-national convergence in policymaking, as a result for the most part of a consensus over the fundamental features of monetary and fiscal policy, the benefits of deregulation, and the importance of letting markets allocate capital, labor, and other resources. The global economy was simply tending towards greater integration under a liberal set of rules (Abdelal 2007; Stiglitz 2002). As Robert Gilpin (1987: 389; 2000) once put it, the late twentieth century resulted in an “increasing interdependence of national economies in trade, finance, and macroeconomic policy.” The global economy was moving in the direction of tighter integration in all of its different aspects, from production and distribution to capital and information flows. In this vein, sociologist Manuel Castells (1996: 92) argued that the global economy had become “an economy with the capacity to work as a unit in real time on a planetary scale.”
Policymakers were hoping for equal opportunities for all countries that joined this new phase of globalization. Markets were open to everyone in an apparently inclusive way. The frontier of development and well-being was extended to a greater number of economies, all of which were supposedly converging on the living standards of the most advanced countries. Policymakers and analysts also thought that the global economy was eminently governable, and that business cycles were a thing of the past. The sociologist Roland Robertson (1992: 8) summarized the new mind-set by arguing that globalization encompassed both “the compression of the world and the intensification of consciousness of the world as a whole.”
As soon as the new century was ushered in, however, a series of crises turned the global economy upside down: the bursting of the technology bubble, a string of high-profile corporate scandals, and, above all, the global economic and financial crisis triggered by the implosion of the American subprime mortgage market. The “great recession” accentuated a trend towards a two-speed global economy. Despite difficulties in some of them, emerging economies weathered the storm much better than both developing and developed markets, surging ahead economically and financially while the richest and the poorest economies languished and wrestled to cope with high private and public indebtedness.
7 - The rise of the global middle class and the high-net-worth elite
- Mauro F. Guillén, Wharton School, University of Pennsylvania, Emilio Ontiveros, Universidad Autónoma de Madrid
-
- Book:
- Global Turning Points
- Published online:
- 28 May 2018
- Print publication:
- 21 April 2016, pp 92-107
-
- Chapter
- Export citation
-
Summary
The global economic, social, and political landscape is being transformed by the growth of social categories such as the middle class and the millionaires. In Europe and the United States these two groups took off during the 1920s, and resumed their growth during the 1950s and 1960s, at a time when Japan joined the trend. Nowadays most of the growth, however, comes from the emerging economies, while the tendency towards greater inequality is resulting in a shrinkage of the middle class in the US and an expansion of the class of millionaires and billionaires. These trends are transforming the global economy and society, creating numerous business opportunities, and also posing serious economic, political, social, and environmental challenges.
The growth of the middle class is one of the most important trends of the last 150 years. However, until very recently, the middle class was the largest social stratum only in relatively rich countries. Over the last 30 years, hundreds of millions of people have been lifted out of poverty in many parts of the world, including Brazil, China, India, Indonesia, Mexico, and Thailand, to name but a few countries. As a result of these changes, the size of the global middle class will soon become larger than the number of people living under the poverty line for the first time in history. Given the values, preferences, and yearnings of the middle class, its rise to global prominence will have major implications for society, politics, and the global economy.
The middle class has been defined in various ways. At the time of the French Revolution, the middle class referred to the bourgeoisie, i.e., the new ascending urban traders, artisans, and professionals, vastly outnumbered by the peasantry and seeking to become politically influential at the expense of the landed aristocracy. In the nineteenth century, Karl Marx referred to the middle class as the petit bourgeoisie, namely, a class between the proletariat (i.e., the working class) and the ruling capitalist class. The sociologist Max Weber echoed this distinction in his extensive studies of social stratification. Hard work, security, and frugality are values commonly associated with the middle class.