Difference Between Globalization and Capitalism
Globalization vs Capitalism
Globalization and capitalism are popular terms nowadays. While people assume that the two terms can be used interchangeably, this is not the case. Globalization is a general term, and can be defined in many ways, as compared to capitalism which has a specific definition. It is incorrect to assume that globalization is synonymous to capitalism. In order to avoid confusion regarding these two terms, one should learn when, and how the word globalization became popular.
A significant term which preceded globalization was ‘corporate giants,’ which was first mentioned by Charles Russell. In the 1930’s, the word globalization emerged, and was identified closely with education via significant human experiences. During the 1960’s, however, the term was adopted by social scientists and economists. Globalization can pertain to a lot of things. Over the years, the term has spawned contradicting, and even absurd, definitions. Thankfully, the United Nations has come up with a definition which asserts that globalization should be viewed in an economic context. The United Nations defined globalization as free trade, which includes the removal of tariffs and other impediments to the free flow of capital, goods, labor, and services.
Economists, on the other hand, define globalization as the assimilation of national economies into one huge international economy via foreign direct investment, migration, trade, capital flows, and trade. Globalization goes hand-in-hand with modern technology to facilitate transactions and encourage free trade all over the world. Internet connectivity ensures that cross-currency, international transactions occur at a daily basis. This is where the term capitalism comes into the picture.
Capitalism is defined as a system wherein economic distribution and production are owned by private entities in order to accumulate profit. Capitalism leans towards private ownership instead of government ownership. Capitalism also leads to the term laissez faire, which asserts that government control over markets is not necessary. Capitalism arose as an economic system way back in the 16th century. It replaced feudalism as the dominant economic system of Western countries, and was adopted by other countries during the 19th and 20th century.
Now, how are the terms globalism and capitalization related? The correct way to integrate these two terms would be to assert that globalization spawns capitalism. The removal of restrictions to free trade has encouraged privately-owned institutions to flourish. The widespread popularity of globalization has granted staying power to capitalism. As a result, many countries which previously rejected capitalism are slowly embracing it because as a means to be incorporated into the global economy formed under globalization.
Globalization and capitalism always go hand-in-hand, but cannot be interchanged. If one were to refer to the unification of different national economies into a single global economy and the advent of free trade, globalization would be the more appropriate term to use. If one were to support private ownership over government ownership, then one pertains to capitalism. Both terms should always be used in their proper context.
1. Globalization and capitalism are popular terms used to describe the economy.
2. Globalization is a general term, and can be defined in many ways, as compared to capitalism which has a specific definition.
3. Globalization was first used in the 1930’s. However, it was only used in an economic context during the 1960’s.
4. There are two important definitions of globalization. The first one is made by the United Nations, which defines globalization as free trade which includes the removal of tariffs and other impediments to the free flow of capital, goods, labor, and services.
5. The second definition is used by economists. They describe globalization as the assimilation of national economies into one huge international economy via foreign direct investment, migration, trade, capital flows, and trade.
6. Capitalism is defined as a system wherein economic distribution and production are owned by private entities in order to accumulate profit. Capitalism leans towards private ownership instead of government ownership.
7. Capitalism is encouraged by globalization. However, the two terms cannot be interchanged.
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