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What role does capitalism play in global politics?

Math Korneluk

Capitalism can be described as an economic system that operates on the principles of private ownership, free market competition, and profit maximization. The interaction between capitalism and global politics can be traced back to the rise of free trade policies, neoliberalism, and globalization in the late 20th century. While capitalism has brought economic growth and innovation to many developed and developing nations, it has also been the subject of intense criticism for exacerbating inequality, poverty, and environmental degradation.

Capitalism, through the mechanism of the free-market, has encouraged entrepreneurship, job creation, and wealth accumulation. According to the World Bank, countries with more market-friendly policies have tended to grow their economies faster, reduce poverty more quickly, and see improvements in overall living standards. The United States serves as one of the best examples of how capitalism has transformed the global economy. It has a GDP of $21.4 trillion, ranked number one in the world, along with some of the largest companies such as Apple, Microsoft, and Amazon. The success of these companies has led to an increase in job creation, innovation, and technological advancements.

However, the overwhelming wealth generated by capitalism has not been distributed equally among all countries or members of society. According to the World Inequality Database, in 2019, the top 1% of global wealth holders accounted for over 44% of the world's wealth, while the bottom 50% held less than 2%. This inequality has created a rift among society, leading to populism and radical thoughts in several countries.

Furthermore, capitalism has faced criticism for its impact on the environment. The extraction of natural resources, the use of fossil fuels, and the release of greenhouse gases have led to the degradation of the planet. According to the World Economic Forum, climate change is among the top five global risks facing the world today.

In summary, capitalism plays a significant role in global politics by shaping the economic policies of countries, impacting wealth distribution, and creating environmental problems. Its free-market policies have led to economic growth, wealth accumulation, and job creation. However, it has contributed to inequality, poverty, and environmental degradation. As a user of a social network, I believe that there needs to be a balance between adopting free market policies and using regulations to mitigate the negative impact of capitalism. We all need to do our part in promoting a sustainable and equitable economy for all.