This website uses cookies to ensure you have the best experience. Learn more

Adam Smith And Globalization: China’s Economic Evolution

1320 words - 6 pages

Globalization is not a new concept – trade, migration, market integration and capital flows have been practiced in various forms dating back centuries. China is at the epicenter of our globalized world and their success is attributed to the tenets outlined in Adam Smith’s Wealth of Nations. In the last fifteen China has become one of the fastest growing economies in the world, rapidly building a strong export and outsourcing industry. Opponents of the globalization believe if Smith were alive today, he would be repulsed by our modern day international business strategies. The general consensus among dissenters of globalization is the misguided belief that capitalism at any level is missing ...view middle of the document...

During this period, one of China’s strongest economic advantages was the availability of its large, inexpensive labor force. According to the World Trade Organization (WTO) and U.S. Bureau of Labor & Statistics, the average wages for Chinese workers in 2001 was approximately $0.58 per hour compared to $33.00 per hour for a U.S. worker. Firms facing fierce competition worldwide could not ignore the substantial differences in labor cost that gave them a comparative advantage. Adam Smith outlined a simple theory about globalization: If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage…(Smith 1776) Labor is one of the largest and in certain sectors the most expensive component in the production of goods. In order for a business to thrive in a worldwide economy, managers must embrace the idea of using the skills of workers from other countries. Outsourcing acknowledges the labor cost to produce a particular product is cheaper if the manufacturer were to produce the same product in-house where the cost per unit is significantly higher. Stable labor costs are important for long-term revenue projections to be relied upon by managers because they are a precursor of where a company is trending financially. It is this efficiency-in-scale that confirms the benefit of the division of labor memorialized by Adam Smith. As a result of the wage disparity between the costs of American workers versus Chinese workers, hundreds of U.S. based firms relocated all or part of their operations to China. In addition to the inexpensive labor market, the Chinese government extended many cost-saving incentives to attract corporate businesses. Critics of globalization often decry about the exploitation of Chinese workers who are forced to endure harsh working condition and other violations of human rights. From a historical perspective, the exploitation of labor has left its ugly footprint in all economic systems. A proponent of globalization would have no qualms acknowledging that some Chinese workers have been subjected to harsh shortcomings of globalization. Nonetheless, the aforementioned can easily be countered by the simple fact China was not a prosperous society prior to globalization. Despite some economic reforms beginning in 1949 under Mao Zedong, the Chinese government continued to embrace Marxist policies that kept their economy stagnant and their citizens impoverished. Adam Smith was always concerned about government encroachment on private enterprise and skeptical of its role in mandating economic activities. Under Mao’s leadership in China, government played a central role in economics and the policies implemented did nothing to elevate the Chinese from generations of poverty. Smith believed government served three primary functions in society. The first duty of the sovereign, that of protecting the...

Find Another Essay On Adam Smith and Globalization: China’s Economic Evolution

A Comparison of the Economic Theories of Adam Smith and Karl Marx

2467 words - 10 pages There is perhaps not a more famous ongoing dialectic argument in the field of political economy than the one between Adam Smith and Karl Marx in regards to capitalism. The two thinkers, although coming to radically different conclusions about the outcomes of the capitalist system for all parties involved, agree on a surprising number of ideas such as labor being the source of commodities’ value, as well as the fact that the division of labor

Comparing Adam Smith and Karl Marx

562 words - 2 pages Comparing Adam Smith and Karl Marx Smith and Marx agree upon the importance of capitalism as unleashing productive powers. Capitalism is born out of the division of labour... that is, it is made possible by dividing jobs up into simple tasks as a way of increasing efficiency. By increasing efficiency, then everyone can produce more than they personally need. The extra produced can go towards the accumulation of capital, (machines, more land

Viewpoints of Durkhiem, Karl Marx, and Adam Smith

790 words - 4 pages keeps the classes where they are. People cannot rise the through the class system. The division of labor is a way of “social control” of the status hierarchy. ADAM SMITH: Adam smith is a good medium of Durkheim and Marx. Adam understood that for a nation, productivity is everything. A lot of productivity occurring within a nation correlates to a lot happening in it. Things are being made and sold because things are needed for different things

Economic Globalization and Organization Development

1172 words - 5 pages Globalization of the economy refers to the integration of the world economies whereby economies in the world are become more interdependence. This economic development is being achieved through cross-border movement of capital, services, goods, and technology. This trend is believed by many to be irreversible and economies will continue depending on one another. One of prominent economists who believe economic globalization cannot be reversed is

Political economy is basically a debate between Adam Smith and Karl Marx - International Relations - Essay

3468 words - 14 pages . (2012) The Evolution of Economic Thought. Cengage Learning. p. 74] [42: Vestergaard, J. (2009). Discipline in the Global Economy?: International Finance and the End of Liberalism. Routledge.] [43: Otteson, J. R. “Adam Smith’s Libertarian Paternalism”. The Oxford Handbook of Freedom. Edited by Schmidtz, D. and Pavel, C.] [44: Smith, A. (1874). An Inquiry into the Nature and Causes of the Wealth of Nations New ed. A. Murray] [45: Chang, S. H

Adam Smith and the Reasoning Behind his Thoughts on the Wealth of Nations

1581 words - 6 pages specific, penchant of human nature that ensures a vague sense of self interest, coupled with reason and speech; produce a very particular kind of capitalist economic system, which he describes in the rest of the book. In speaking about labor, Smith characterizes it in a negative light. He observes the division of labor as positive to production and competition, but in the social sense sees it as a dummying of the masses. “The man whose whole life

Economic Integration and Economic Globalization: Friend or For?

1794 words - 8 pages In the world today, almost everything you purchase, lest it be grown in your own backyard, travels thousands of miles to get to your doorstep. This is due to to economic globalization and economic integration, which has provided the world with a platform to interact peacefully. While conflict and war seem inevitable, economic integration and economic globalization which was first introduced by the Bretton Woods Conference in 1994 has changed

Economis Theorists- Adam Smith, Karl Marx, and John Maynard Keynes and their contributions to the field of economics

597 words - 2 pages Throughout the centuries, there have been many economists, who have contributed to the many economic theories. Among them is Adam Smith, also known as the Father of Capitalism. His theory on beneficial workings of the free marketplace and his 1776 Wealth of Nations is what he is most noted for. Karl Marx, the Father of Communism, is most famous for his theory on the conflict within capitalism. There is also John Maynard Keynes, who is known as

Small Element, Big Difference: A comparison of Adam Smith and Karl Marx's view on labor in a capitalist society

1721 words - 7 pages Adam Smith and Karl Marx are both considered few of the most influential giants in social and economical history. When viewing their economical standpoints, it is not difficult to recognize the difference in ideas that they have regarding society. Adam Smith is an advocator for capitalism and the wealth that can be accumulated in it, while Karl Marx critiques on the flaws of capitalism and praises communism that will overthrow the capitalist

Economic Globalization and its Importance to Today’s Business

616 words - 3 pages What is Economic Globalization? The world is becoming smaller and smaller as days go by. This is not on the perspective of the earth’s real size, but rather it is becoming smaller due to the effect of globalization. In the simplicity terms globalization can be said to be that free movement of resources across borders. Globalization has more to do with cross border issues or rather internationalism. Technology is making this effect possible. Than

Economic Globalization and the Law in the Twenty-first Century

7734 words - 31 pages Economic Globalization and LawGlobalization and the development of new legal forms and regimes during the past half century have gone hand-in-hand. The term "globalization," and even its existence, are contested (cf. Robertson, 1992; Hirst and Thompson, 1996; Giddens, 1990; Sassen, 1996; T. L. Friedman, 1999). However, globalization is not new, it cannot be reduced merely to market integration, still less to the neoliberal political and economic

Similar Essays

Adam Smith And Globalization: China’s Economic Evolution

1158 words - 5 pages consensus among dissenters of globalization is the misguided belief that capitalism at any level is missing the moral sentiment espoused by Smith’s philosophical viewpoints. Even though Adam Smith would acknowledge that some Chinese citizens are casualties of globalization, he would conclude the economic development of China’s poverty stricken society unequivocally raised their standard of living. Adam Smith's Wealth of Nations, published

Adam Smith And Globalization: China’s Economic Evolution

1056 words - 5 pages Adam Smith's Wealth of Nations, published coincidently the same year as the Declaration of Independence, is considered by many economic scholars to be the early framework of capitalism. Smith is often designated in business and politics as the pillar of the free-market system. Supporters of globalization are convinced that the positive effects originate in the Wealth of Nations. The opposition believes Adam Smith would be repulsed by our

Free Trade And Globalization In The Wealth Of Nations By Adam Smith

1255 words - 6 pages licensing rules (“Investopedia,” n.d). Removing such barriers allows international trade occur easier and countries are able to put to practice the comparative advantage aspect in relation to other economies. 
 In Adam Smiths paper “The Wealth Of Nations” paper by Adam Smiths projects the view on international trade as not a zero sum equation resulting in being beneficial to all parties involved eventually. By enacting a policy of free trade Smith

A Comparison Of The Economic Philosophies Of Adam Smith, John Stuart Mill, And Karl Marx

1811 words - 7 pages economists shared within their economic process and their beliefs regarding human nature. The first economist we will discuss is Adam Smith. Before we discuss Smith's views, we will provide a brief description of the setting in which Smith was able to create his assumptions, and formulate his theories. Smith studied Social Philosophy at the University of Glasgow and the University of Oxford, the latter of which he was not as fond of. The primary