The Principal Legacies of Imperialism for the Contemporary World Economy

Abstract This study explores the principal legacies of imperialism for the contemporary world economy. The findings indicate that although colonialism ended many years ago, its effects and policies still remain in the global economy and it is being aided by globalisation. The developed economies use foreign aid and multinationals to control the economies of the developing countries. Introduction The modern world economy has been influenced by both imperialism and the experience of colonialism. Western imperialism dominated the global history in the last 200 years and it transformed both the third world and western nations in terms of culture, economy, politics and socialisation (Dutt, 2006). The term imperialism was derived from a Latin word imperator meaning autocratic power and centralised government (Smith & Dawson Books, 2008). As such imperialism involves one country dominating another country or other countries in ways that benefit it and not the latter. The impact of Europe on the world economy is significant because it has shaped the economic sphere. The legacy of imperialism exists in the form of communication networks, economic structures and ties to metropolitan economies typifying former colonies. Principal Legacies of Imperialism on the Contemporary World Economy Imperialism was the precursor of globalisation that characterises the contemporary world economy (Chattopadhyaya & Das, 2007). This legacy is not entirely benign and the effects of the restructuring of economies of the former colonies have led to dependency on the metropole’s economies. Colonialism had to be stopped because it was exploitative, displaced people from their natural status and transferred wealth from one country to the other. However, globalisation came up to replace imperialism by achieving the same results but this time legitimately and in a manner that is politically correct (Ramana & Observer Research Foundation, 2008). The World Trade Organisation and the General Agreement on Tariffs and Trade legitimised this legacy of imperialism through putting in place trade agreements to eliminate trade barriers. This ensures that countries participate in their own subjugation and in the process transform themselves into neo-colonial states (Hont, 2005). Globalisation has not led to economic equality and interdependence as it is often claimed. It has instead made the lesser developed countries dependent on the developed countries (Dunning & Lundan, 2008). In addition to this, it has also led to indebtedness to the International Financial Institutions owned by the west. In some cases it has also led to unfair competition, greater debt and increased poverty. Although globalisation has created wealth for some countries, it has also increased poverty for others. Dutt (2006) adds that it is a more efficient way of exploiting other nations with the help of established international institutions and mechanisms designed to entrap the lesser developed countries through creating economic dependency, debt, and increasing poverty. However unlike colonialism these countries cannot revolt against the loss of their sovereignty. This is because any attempts to revolt could make them lose economic aid that would result in economic and human crisis. T his is a huge risk that these countries are never willing to risk. All these are consequences of the structuring of the economies of the former colonies making them dependent on exports, monoculture and fluctuations in the global market. Imperialism created a political economic reality of dependency and exploitation because most of the lesser developed economies do not have full control of their economic affairs (Hont, 2005). There are counterarguments that political economies have lives of their own which make them not fully controllable or that globalisation has taken away such control from all countries. However this perception does not take into account the fact that there is a huge difference in the extent of control. The northern nation states have a relatively strong position because of the financial institutions and multinationals which give them higher control over their political economies (Tester, 2010). The southern nation states on the other hand are impoverished, indebted and dependent on foreign investment and foreign aid. Therefore neo-colonialism steps in because these nation states have reduced control. The contemporary world economy is organised around capitalist imperialism characterised by systematic accumulation of capital through organised labour exploitation and penetrating overseas markets. The capital imperialists make investments in the other countries, transforms and then dominates their economies. Additionally, they integrate their productive and financial structures into the international system of capital accumulation (Chattopadhyaya & Das, 2007). Expansion is the central imperative of capitalism because investors only pursue business ventures when they see opportunities for extracting more than they invest. These firms only increase their earnings when their enterprises grow. As such the capitalists keep searching for ways of generating more money. They have to invest in order to generate profits and gather strengths to be able to beat off competition and unpredictable markets. Owing to its expansionary nature, capitalism has to keep exploring other opportunities away from home. It is this expansion that ends up destroying whole societies as people are forced to transform into disfranchised wage employees (Smith & Dawson Books, 2008). Consumer societies, mass market and mass media replace folk cultures and indigenous societies. Agribusiness factory farms supplant cooperative lands, centralised autocracies supplant autonomous regions and desolate shanty towns replace villages. European and North American corporations have acquired and now control over 75% of mineral resources in Africa, Asia and Latin America (Dunning & Lundan, 2008). However, the pursuit for natural resources is not the only reason for expanding operations overseas. They also need to lower the cost of production and maximise profits through investing in economies with cheaper labour markets. They make over 50% profits in the lesser developed countries compared to their home countries because of factors like low wages, weak labour unions, low taxes, weak or non-existent environmen tal and occupational protections and non-existent work benefits (Guo & Guo, 2010). For instance Citibank which is one of the largest US firms makes about approximately 75% of its profits from its operations overseas (Ramana & Observer Research Foundation, 2008). Imperialism has made it possible for the multinational firms to continue growing even at a time when their home markets are sluggish because of the dramatic growth in the foreign markets which still remain unexploited. Currently some 400 transnational companies control approximately 80% capital assets in the free global market (Hobson, 2005). These companies have developed global production lines across the lesser developed countries. Multiple sourcing allows these transnational companies to overcome strikes in one country by increasing production in the other countries. By playing the workers of different countries against each other, they discourage them from making demands on wage and benefit increments which undermine the strategies of labour unions. These firms find cheap labour, natural resources and other profitable conditions in the less developed countries. This is what enables them to generate huge profits which they then repatriate back to their home countries. Both national and local governments often compete in attracting multinational companies with huge expectations in terms of employment provision, tax revenues and economic activity (Sharp, 2009). These governments offer the companies incentives in terms of lax labour or environmental regulations, pledges of government assistance, tax breaks and other subsidies. Other than offering these governments a promise of economic growth, these companies exert power over government through their technical and intellectual property. For instance Microsoft has software patents and Adidas has patents on shoe designs. The patents allow these corporations to exercise their monopolistic powers in the local economy and in the process inhibit the growth of the local enterprises. Additionally, this monopoly helps them maintain low costs of labour and at times even exploitative. Owing to the size of these corporations, they often influence government policies using threats of withdrawal from the market (L ouis, 2006). This forces the governments of the lesser developed states to make polices that benefit the corporations rather than protecting the rights of the citizens. Therefore these corporations exploit the local labour force and funnel the important resources away from these countries into their home countries. In this way globalisation has made the lesser developed economies to be dependent on the developed countries. The multinational companies also cause uneven distribution of benefits because the resources are diverted from the local people into foreign markets (Louis, 2006). For instance land that could have been used to produce food for the local populations is used by these corporations to grow cash crops for their operations. This leads to high costs of food for the local populations as they are at times forced to import what they could produce locally if their natural resources were effectively utilised. In addition to this, fresh produce are packaged for the international markets where they will fetch more money rather than feeding the local populations. This is the reason why foreign dependency has led to widespread malnutrition in many lesser developed economies (Tester, 2010). Conclusion In conclusion, this study has explored the principles legacies of imperialism on the contemporary world economy. The findings indicate that the developed economies still manage the economies of former colonies and the developing economies using different mechanisms like aid and multinational companies with the aid of globalisation. Economic globalisation has also led to unequal economic relations between the developed and the developing economies. The governments of the lesser developed economies act more in the interests of the multinationals and other economies that provide them with aid instead of acting independently on behalf of the citizens. This creates a feeling of economic connection with the lesser developed economies feeling that they cannot survive on their own. Therefore the dependent relations that were established under colonialism still continue to dominate the world economy through economic imperialism or neo-colonialism. References Chattopadhyaya, D. P., & Das, G. J. B. (2007) Science, technology, imperialism and war. New Delhi: Pearson Longman. Dunning, J. H., & Lundan, S. M. (2008) Multinational enterprises and the global economy. Cheltenham, UK: Edward Elgar. Dutt, S. (2006). India in a Globalized World. Manchester: Manchester University Press. Guo, S., & Guo, B. (2010). Greater China in an era of globalization. Lanham, Md: Rowman & Littlefield. Hobson, J. A. (2005). Imperialism: A study. New York: Cosimo. 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