On Stratification

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A research paper written in an attempt to understand the causes of, and solutions to, the problem of global economic stratification.

Submitted: April 18, 2017

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Submitted: April 18, 2017



On Global Stratification


I would like to rid the reader’s mind of any moral messages that might be interpreted from this writing, as I do not wish to push any moral message or agenda on the reader whatsoever. Having said this, I must admit that I am a devout progressive, and surely I’m biased in favor of progressive policies that have evidently worked. I am simply synthesizing research that has already been done by others. Due to the complication and the overwhelming quantity of interacting forces at play, I make no moral judgments about the parties involved, and anything that may give the impression of moral condemnation on my part is completely unintentional. I do, however, support change in certain institutions that, in my opinion, are in part responsible for our current global situation. I find it still necessary to interrupt the flow of ideas to clarify statements that may seem to be morally charged. It is important to remember that the forces at work with regard to this issue are numerous and complex.

The central question that I will deal with is: why is the world socially and economically stratified, and why is this stratification universal? Why is it that the populations of the southern hemisphere, those in the so-called third world, experience mass poverty, poor health, corrupt and oppressive dictatorial regimes, and a lack of safety and basic human needs, while the northern hemisphere generally live very comfortable lives? There are many different opinions about what sustains this situation. I feel that just one simple explanation is not adequate, but there are many simple explanations that, when taken together, satisfactorily answer the question to some degree. There are four fundamental reasons the world remains stratified in the manner described. Firstly, people in the third world countries cannot compete in the market with western corporations. Second, the west, especially the United States, routinely interferes with foreign governments and markets, consequently maintaining this arrangement. Next, the nations that first industrialized have gained an advantage in the market over “developing” nations, and this advantage has perpetuated the growth of the first world countries, while causing stagnation in the third world.

The obvious cause of economic inequality throughout the world is the market itself. The market dictates wages people earn as a function of supply and demand, and wages being subject to the market has many benefits. It should then come as no surprise that since we now have a global labor market with nearly every country connected economically, global inequality is built into the system (to a large extent). Inequality varies drastically from one country to another for various, often complex, reasons. But the current level of mass poverty in the third world is extremely high, and extremely dangerous. One of the main functions of government is to control and mitigate negative consequences of capitalist markets, but almost all third world governments, and even some western ones, have failed in this capacity, as most third world countries simply lack strong enough institutions to do so. Fortunately, much research shows that market consequences can be controlled and inequality can be lessened through what we think of in the West as progressive policies.

One thing that should be made clear is the fact that our planet is not in any shortage of the resources of basic human needs; shelter, water, food, etc. are all extremely plentiful on a global scale. Although there are regional shortages of water and food, the problem could easily be overcome. The problem is one of distribution, not of production or availability (globally). Our current system is not responsive to the basic needs of people in the third world, and in some cases this is true in the developed world as well. Fortunately this problem is not without solutions. Power resource theory is a political theory which proposes the idea that the distribution of power between major classes is to some extent accountable for the successes and failures of various political ideologies. It argues that “at its core, it asserts that working class power achieved through organization by labor unions or left parties produces more egalitarian distributional outcomes.”

The distribution of power resources in society… or the distribution of power in civil society… determines distributive outcomes directly in the market and indirectly through the state. Like giddens and unlike most Marxists, both conceptualize capital, skills , and labor power as market power resources and determinants of class position. Both also follow the traditional Marxist position of seeing capital as a unique power resource because it is concentrated in the hands of the few, and they argue that, in the hypothetical absence of subordinate class organization, the asymmetric distribution of power resources in capitalist society results in state power being almost exclusively in the hands of capital owners, even in democracies. (Bradley, et al.)

According to a study on liberal redistributive policies and outcomes:

The results of our study are a resounding vindication of power resources theory….These theories hypothesize a strong relationship between distributive outcomes and the weight of subordinate classes in the balance of class power whose expressions are union movement strength, leftist party mobilization, and leftist party governance. (Bradley, et al.)


Laissez-fare approaches have proven extremely inadequate in preventing economic inequality. If left to its own devices, an unregulated market not only causes massive income disparity, but also reduces competition between firms and creates a concentration of jobs within successful ones.

One would think, and I find it quite reasonable, that free trade would have mutual benefits for all participants involved, and that any negative consequences would be vastly outweighed by positive ones. However, this has not been the case; the countries that were first to industrialize are the countries in the west (largely) that are wealthy today, indeed they are the countries in which the capitalist industrial revolution started, but countries in the “developing world” have remained far behind in economic development. Many authors have written about this phenomenon and the reasons why this lop-sided structure has remained. Jeffery Williamson wrote a book entitled Trade and Poverty: When the Third World Fell Behind, where he puts forth the idea that countries that industrialized first sold manufactured goods to the third world, while the third world sold raw materials to the wealthy, industrialized nations (it seems the opposite arrangement exists today). A reviewer of Williamson’s book writes: “trade benefited both industrialized and non-industrialized countries, but the former benefited more than the latter. Industrialized countries specialized in manufacturing; the rest of the world became suppliers of raw materials. Agriculture and mining tended to concentrate incomes in non-industrialized countries, and that in turn inhibited their domestic economic development” (Whalen). In 1988, even the Pope recognized that the wealthy powers have had a definite negative economic impact in their interactions with developing countries through loans and the privatization of resources in third world countries when these debts become impossible to repay. “[Pope John Paul II] said loans originally intended to help development had become a ‘counter-productive mechanism’ and a brake to progress. To service their debts, debtor nations were forced to export capital needed to maintain their standard of living” (Armstrong).

Walmart is a perfect example of how market forces can eliminate competition and have a negative impact on competing firms. This situation is a microcosm of what is happening in the third world. When Walmart wants to set up in a small community it is almost always a matter of great interest to that community. People are keenly aware of the negative impacts Walmart has had on small businesses across the US, as well as the effects of the flight of money out of the community that accompanies Walmart’s presence. Small businesses simply cannot compete with Walmart. This is exactly what is happening with people in the third world (except they, in many countries, have no choice in the matter). They are trying to compete with Walmart and this is virtually impossible. it’s not that the resources do not exist in third world countries, it is that they are not being developed by those people living in those countries, for they lack the capital to invest in industrial development. A farmer in India, for example, is unable to compete with the United State’s agricultural corporations. Since the farmer is using techniques that generate low yields, he is barely able to support himself, let alone acquire the surplus capital necessary to grow his business. He is therefore unable to experiment with new farming techniques, or to simply upgrade his equipment, and thus, is unable to produce higher yields. In contrast, large agricultural corporations based in the west can produce extremely high amounts, for much cheaper prices, essentially doing to our poor Indian farmer what Walmart has done to small businesses in the US for decades now. People in third world countries are disadvantaged in other ways too. Globalization has mixed impacts on these countries that manipulate their economic policies so as to become havens for multinational corporations. They are environmentally disastrous for the country, but they do raise the standard of living of many workers, as well as create the need for investment in infrastructure to support industry. The only way to offset the significant disadvantages of companies in the third world is through government policy, which has been extensively studied and shown to be effective.

Although it seems to be, it is not a secret that the US and other western countries have continually interfered with the politics of third world foreign countries, covertly and overtly, by force and through other means. Much has been written about the exploitation and manipulation of the third world by institutions of the United States. The Canadian historian Gabriel Kolko wrote about American foreign policy in the third world in the period from just after World War two until 1980.

American intrusion into the Third World, while neither wanted or welcomed, was primarily for the purpose of creating opportunities for American business to operate freely and profitably. The overall strategy of the policymakers in Washington was to advance the economic interest of the United States through gaining either access to or control of the markets and natural resources of the developing countries. American security needs were equated with ensuring a preponderant role of the United States in an integrated world economic order, unchallenged and unsurpassed by any other power. The rhetoric of the Communist threat and Soviet expansionism was conveniently used to emplace compliant leaders as heads of ThirWorld regimes who willingly serves as instruments of American policy. (Hannif 169).

Western intervention in the third world is not difficult to understand when you realize that these countries are, contrary to popular belief, often rich in natural resources. Stability in these countries, along with economic polices that make doing business as cheap as possible, is what corporations and the US government working their interests seek. The US government trades weapons for access to regimes that often oppress people and deprive them of basic necessities so that the regime can remain in power and protect business activity. This has happened, and will continue to happen on every continent on the planet. Business can also become disturbed if a country either democratically elects a progressive leader, or overthrows a government that was friendly to the west. If certain resources that are being extracted by western companies becomes threatened by local policy, the US and other western countries have an incentive to remove that regime, and support rebel forces that will return the country to conditions favorable for Western multinational corporations. Americans have worked on the campaign teams of some politicians in foreign countries to get our favored candidate elected. One thing to note is that the US and the West are completely indifferent to the type of government it does business with, provided that it allows for access to resources. The public in the US seems to be relatively ignorant of these facts, which have been extensively documented for decades. Whenever the government of the US communicates with the media about foreign military policy (if a conflict even receives any attention at all (see Manufacturing Consent by Noam Chomsky), the US never ceases to practice the same tactics of demonizing certain groups, and pushing the common thread of “spreading democracy.” Indeed, our intentions, like the ostensible intentions of all previous empires before us, are always noble and just. Spreading democracy is of no concern to the US when you examine regimes like that of Saudi Arabia, probably our closest oil providing nation. The tampering with governments around the globe has been documented by many, with justification changing in response to the enemy of the United States at the time, either the spread of Communism or the threat of terrorism. Although in some cases these justifications may be true, in nearly all they are obviously not, and simple logic and an honest examination of the facts reveals them to be so. Again I must emphasize that the US is in no way remarkable or different from other dominant empires of the past in this regard, and the reasons for this are pretty elementary and clear.


The US is, in my opinion, the greatest country the world has ever seen in many respects. Americans enjoy a very high standard of living, have the most personal liberties, have decent (although deteriorating) social support structures, and many other benefits that are exclusively enjoyed by Americans. In my opinion, our country should be held to the highest possible standard, because I think we are in a unique position historically and contemporarily to become an ideal society, so far as any society can be considered as such. America also has an oligarchy, which has been studied for the entire existence of the nation. This small group of people make decisions that do not benefit most of the population around the world, but in many cases benefit Americans. I firmly believe that the United States is also in a unique position in the world when it comes to helping other countries develop their economies and the health and welfare of their people. Much of (certainly not all) the suffering and mass poverty that has persisted in the Third World has been caused either directly or indirectly by American institutions, and more frequently by American corporations. Capitalism in the US is very short sighted, goals are rarely long term, and most goals are made on an annual or quarterly basis. A major problem and contributor to global inequality is our system of socialism for the rich, and “Darwinian capitalism” for the rest of the population. Although this has proven successful and semi-stable for nearly 150 years, each business cycle has required basic structural reforms (even when they’re not enacted) and due to very basic resource and environmental constraints, it cannot last forever, and it should be altered sooner rather than later if we are to avoid mass chaos in our economic and environmental systems.



1945-80 by Gabriel Kolko. Review by Ghulam M. Hannif. Annals of the American Academy of Political and Social Science, Vol. 506, Human Rights around the World (Nov., 1989), pp. 168-169. Published by Sage Publications, Inc. URL: http://www.jstor.org/stable/1046680


Nincic, M. (1975). Determinants of third world hostility toward the United States. The Journal of Conflict Resolution (Pre-1986),19(4), 620. Retrieved from http://search.proquest.com/docview/235749686?accountid=13211


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