A comparative analysis of Liberalism and Marxism in understanding the global economy

and global inequality:

Nabeel Mohammad
U23572877
PTO 101
GM (Gabe) Vermeulen
6 October 2023

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 1. Introduction:

International relations theory offers many different views and perspectives on the global
economy as well as global equality. It aims to explain behaviors in international politics.
Liberalism and Marxism are two distinctive theories which provide distinct perspectives
on the global economy and global inequality. Liberalism, a classical theory, focuses on
emphasizing the role of free markets and international institutions in promoting
prosperity and reducing inequality. Marxism, a critical theory, highlights how the global
economy increases global inequality and continues to make it worse. Marxism is a
philosophy that analyses the impact of the ruling class on the laborer’s which lead to the
uneven distribution of wealth and privileges in society. This essay aims to compare and
contrast how these theories understand the global economy and global inequality.

2. Liberalism and the Global Economy:

The global economy functions optimally when there are minimal trade barriers which
allow for efficient allocation of resources across national borders. Globalization grew at
immense rate and became more advanced over time. The liberal political economy
allowed for globalization to be seen as a positive instead of a negative. This allowed for
worldwide prosperity. International organizations grew at an immense rate which helped
establish neoliberal institutionalism as a major rival to neorealism. In the handbook,
Global politics, the third edition, it has been stated that “if there had been a ‘liberal
moment’ in world affairs, it may not have extended far beyond the 1990s, as other
trends emerged that seemed to defy liberal analysis” (Whitham and Heywood, 2023:
202). Liberalism has three main sub-traditions which may contradict one another. This
includes the rejection of power politics as the only possible outcome of international
relations, mutual benefits and international relations as well as the role of international
organizations and non-governmental actors in shaping state preferences. Liberals favor
policies that boost production and provide chances for people and countries to prosper.
They also support the unification of national economies into a single, global economy.

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 3. Marxism and the Global Economy:

Marxism was seen as a exploitative capitalist class. “Imperialism and colonialism were
the two driving forces behind the globalization and advancement of capitalism, as
capital states violently exploited natural resources and labour oversees whilst also
creating new potential consumer markets for their own exports.” (Whitham and
Heywood, 2023: 245). The amount of surplus created and distributed determines a
system of social class. The two main classes include the Bourgeoisie, the capitalists
who control both the proletariat and the means of production who were the working
class. Capitalism generally created inequality as well as class struggle.

4. Liberalism and Global Inequality:

Liberalism acknowledges the existence of global inequality but attributes it to factors
such as differences in economic development, technological capabilities, and
governance. Economic growth and development can help alleviate inequality over time.
Every liberal-democratic government in the world guarantees equality, but growing
wealth and income disparities put fundamental democratic values and institutions in
jeopardy. In the recent years, the economic inequality has increased significantly.
Liberalism believes that free trade and market-driven economies can contribute to
reducing global poverty and inequality around the globe.

5. Marxism and Global Inequality:

Marxists theorize that inequality and poverty are functional components of the capitalist
mode of production. Inequality and poverty cannot be eradicated without fundamental
changes in production. “Global inequality helps sustain domestic privilege. The belief
that the risks that global inequality poses can be contained in the global margins is
contradicted by the cross-border effects of environmental degradation , migration,
transnational crime and terrorism” (Jan Nederveen Pieterse, 2002: 564).

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 6. Conclusion:

In conclusion, Liberalism as well as Marxism provide contrasting perspectives on the

global economy and global inequality. Liberalism focuses on emphasizing the role of
free markets and international institutions in promoting prosperity and reducing
inequality. Marxism highlights how the global economy increases global inequality and
continues to make it worse. Understanding these theories aid and assist policymakers
in developing strategies to address global inequalities and aim to achieve a more
equitable global economy.

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 7. Reference List:

Whitham, B. and Heywood, A. (2023). Global Politics. Bloomsbury Publishing.

Peet, R. (2010). Inequality and Poverty: A Marxist-Geographic Theory. Annals of the

Association of American Geographers, [online] 65(4), pp.564–571.
doi:https://doi.org/10.1111/j.1467-8306.1975.tb01063.x.

Nederveen Pieterse, Jan. (2002). Global inequality: Bringing politics back in. Third
World Quarterly - THIRD WORLD Q. 23. 1023-1046. 10.1080/0143659022000036667.

Dixon, R. and Suk, J. (n.d.). Liberal Constitutionalism and Economic Inequality. [online]
Available at:
https://lawreview.uchicago.edu/sites/default/files/05%20Dixon%20%26%20Suk_SYMP_
Online.pdf.