5 Things That Make Capitalism "Global"

Light Trails Over Globe
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Global capitalism is the fourth and current epoch of capitalism. What distinguishes it from earlier epochs of mercantile capitalism, classical capitalism, and national-corporate capitalism is that the system, which was previously administered by and within nations, now transcends nations, and thus is transnational, or global, in scope. In its global form, all aspects of the system, including production, accumulation, class relations, and governance, have been disembedded from the nation and reorganized in a globally integrated way that increases the freedom and flexibility with which corporations and financial institutions operate.

"Worldwide Market Liberalization" and "Integration"

In his book Latin America and Global Capitalism, sociologist William I. Robinson explains that today’s global capitalist economy is the result of “...worldwide market liberalization and the construction of a new legal and regulatory superstructure for the global economy... and the internal restructuring and global integration of each national economy. The combination of the two is intended to create a ‘liberal world order,’ an open global economy, and a global policy regime that breaks down all national barriers to the free movement of transnational capital between borders and the free operation of capital within borders in the search for new productive outlets for excess accumulated capital.”

Characteristics of Global Capitalism

The process of globalizing the economy began in the mid-twentieth century. Today, global capitalism is defined by the following five characteristics.

Production of Goods

The production of goods is global in nature. Corporations can now disperse the production process around the world, so that components of products may be produced in a variety of places, final assembly done in another, none of which may be the country in which the business is incorporated. In fact, global corporations, like Apple, Walmart, and Nike, for example, act as mega-buyers of goods from globally dispersed suppliers, instead of as producers of goods.

Capital and Labor

The relationship between capital and labor is global in scope, highly flexible, and thus very different from epochs past. Because corporations are no longer limited to producing within their home countries, they now, whether directly or indirectly through contractors, employ people around the world in all aspects of production and distribution. In this context, labor is flexible in that a corporation can draw from an entire globe’s worth of workers, and can relocate production to areas where labor is cheaper or more highly skilled, should it wish to.

The Financial System

The financial system and circuits of accumulation operate on a global level. Wealth held and traded by corporations and individuals is scattered around the world in a variety of places, which has made taxing wealth very difficult. Individuals and corporations from all over the world now invest in businesses, financial instruments like stocks or mortgages, and real estate, among other things, wherever they please, giving them great influence in communities far and wide.

New Class of Capitalists

There is now a transnational class of capitalists (owners of the means of production and high level financiers and investors) whose shared interests shape the policies and practices of global production, trade, and finance. Relations of power are now global in scope, and while it is still relevant and important to consider how relations of power exist and effect social life within nations and local communities, it is deeply important to understand how power operates on a global scale, and how it filters down through national, state, and local governments to impact the everyday lives of people all over the world.

Transnational State

The policies of global production, trade, and finance are created and administered by a variety of institutions that, together, compose a transnational state. The epoch of global capitalism has ushered in a new global system of governance and authority that impacts what happens within nations and communities around the world. The core institutions of the transnational state are the United Nations, the World Trade Organization, the Group of 20, the World Economic Forum, the International Monetary Fund, and the World Bank. Together, these organizations make and enforce the rules of global capitalism. They set an agenda for global production and trade that nations are expected to fall in line with if they want to participate in the system.

Increased Wealth, Corporate Power

Because it has freed corporations from national constraints in highly developed nations like labor laws, environmental regulations, corporate taxes on accumulated wealth, and import and export tariffs, this new phase of capitalism has fostered unprecedented levels of wealth accumulation and has expanded the power and influence that corporations hold in society. Corporate and financial executives, as members of the transnational capitalist class, now influence policy decisions that filter down to all the world’s nations and local communities.

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Cole, Nicki Lisa, Ph.D. "5 Things That Make Capitalism "Global"." ThoughtCo, Jul. 11, 2021, thoughtco.com/global-capitalism-p2-3026336. Cole, Nicki Lisa, Ph.D. (2021, July 11). 5 Things That Make Capitalism "Global". Retrieved from https://www.thoughtco.com/global-capitalism-p2-3026336 Cole, Nicki Lisa, Ph.D. "5 Things That Make Capitalism "Global"." ThoughtCo. https://www.thoughtco.com/global-capitalism-p2-3026336 (accessed February 1, 2023).