Globalization Leads to the Demise of the State

Essay by bklyneliteUniversity, Bachelor'sB+, April 2008

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The mercantilists were the very first group of thinkers to relate economic prosperity with international trade. They believed that the strength of a nation is determined through its possession of precious metals or bullions. As the state generally invaded neighboring nations and set up colonies, thereby provide no new market to the traders; mercantilists always supported the existence of a powerful state. (O’Rourke, 1999) The mercantilists’ view of state interference in international trade and other affairs were severely criticized by the Father of the Modern Economists, Adam Smith. Smith initiated the generation of classical economists and Ricardo, Marshall and others later backed his ideas, the classical view was dashed to the ground, courting the Great Depression. Maynard’s Keynes suggested a strict government intervention in order to stabilize the economy and lead it the point of prosperity. (Keynes, 1965) Following the Keynesian doctrine, the concept of planned economy emerged. This concept received fertile soil to prosper at the background of socialist movement in Soviet Russia and later in China.

For around sixty years the concept of planned economy has been embraced by several nations of the world. The role of state is extremely important in a planned economy, as it is the state that formulates the policies and then implements them. When the planned economic set up failed to deliver what was expected owing to high level of corruption among the government officials, the bureaucrat politician nexus and lack of political will, then at the beginning of 1990, a new concept began to emerge in the global economic scenario and was later termed as globalization. (O’Rourke, 1999)Globalization was not a new concept when the European countries were making efforts to unite under one hood to prevent American aggression even at that time the essence of globalization was present. The only difference...