Adam Smith's brand of Capitalism assumed inequality to start with. But if you ask people like Jeffrey Sachs, the answer you will get is that global poverty is coming to an end if it has not not ended. 

In a general equilibrium analysis say for the EMU vs. Latin America, I noticed like you imply that what the EMU gains from liberalization is what Latin America looses, controlling for the rest of the world. But I do not generalize that because a different grouping of countries might show otherwise. So it seems to me that induction depends of the sample selected, how many groups are formed, how the gains are distributed, etc., just like a collusion problem in game theory.

Globalization is nothing more than an ideology that is imposed on material and cultural structures that were formed a long time ago. Take for instance the theory of Wallerstein - capitalism as it is was born and developed since around 1500 (alongside a certain power structure that includes racism and international division of labor). So, what is called "globalization" is nothing more (maybe not even that) than a radicalization or acceleration of stuff that already existed. This would explain the fact that those countries that win are almost exclusively countries of the Global North.

Quite interesting! 

Countries have such a great disparity in Wealth/GDP shares. The index Wealth/GDP must depend very much on how you have measured Wealth. We have relatively exact GDP statistics for almost all countries whereas we have rather statistics of rather lower quality, be it public or private, with respect to Wealth. Your index relies on the Global Wealth Databook 2014 of Credit Suisse and we should remind that this result may not very exact. Even though, it is evident that there is big disparity in Wealth/GDP. 

We may point out many factors which explain these results. In my impression, time factor is very important. As you point out, "most of the major beneficiaries have build up their country and social capital over centuries." It will be too short to assess the merits and demerits of the WTO system. I wonder if you have analyzed the difference of Wealth/GDP before WTO and 20 years after. Reading your explanation, it seems you have simply compared the present share of Wealth and the present share of GDP. (Am I am wrong?) 

Major countries listed in your "deficit" countries, namely Mexico, China, South Africa, Turkey, Indonesia, India (excepting Russia) are countries which are now accelerating their process of industrialization and increasing their GDP rapidly. What will happen after 20 years? They may accumulate to get better Wealth/GDP ratio. 

It is too hasty to get any assessment of GDP or globalization from these data, but the research you made is interesting for itself. You are also engendering a necessary discussion on the difficult question of globalization and I think this is a stimulus for us.

Dear Yoshinori! Thank you for your answer first. First I don't think that the GDP Data that include e,g. spendings for arms, throw-away-consumer products, prisons and wars are more reliable than the data of Credit Suisse.

While comparing the data from 2014 with the Credit Suisse Wealth Report from 2010 (which Piketty refers to by the way!)

http://piketty.pse.ens.fr/files/DaviesShorrocks2010%28CSGlobalWealthReport%29.pdf

we can of course see that both, GDP and wealth increased in many developing countries too - but not same as the GDP-Wealth-Ratio.

You're right, I "simply" compared the shares. But the background of using a GDP-Wealth-Ratio is my research on Social Capital: what's the Impact of Social Capital on the distribution of common wealth?

If you have a look at the chart attached you see that Japan has a high Social Capital when it commes to support the community. The private wealth of Japan is in real estate and governmental bonds, but both require a high social capital to be kept.

So I'm looking for a link between Social Capital and public affluence, not only for new international rules of trade. E.g. Cuba may have an excellent GDP-Wealth-Ratio due to it's Isolation.

@Philipp: I used "globalization" in the framework of the WTO mission to promote allegedly "free trade" which doesn't happen because e.g. the U.S. and the EU do not allow agricultural or electricity import that e.g. can be easily provided by African and Latin American countries.

Today in the international debate there is a focus on international rules of law when it comes to resolve problems such as poverty, diseases or climate change. But standards didn't work in Human Rights, Democracy and Governance  - so why should they work in trade or distribution justice?

You need local and national Social Capital to build up and keep wealth in your community. That's a local, not an international task.

Great! It is an interesting and in fact a new important idea that to preserve private assets (wealth) requires social capital.

Dear Alexander, 

first of all, I would be carefull to call the globalization "an idea" - it is more the process that is simply going on, despite of opinions surrounded (that change in time). 

Second, globalization has numerous effects and the effect on wealth is just one of it. Very often a peacemaking is mentioned as the crucial one - it is difficult to fight someone who you are trading with. 

Third, the wealth of a nation/state is influenced by numerous features and the globalization is just one of it. It has been investigated by numerous authors why some nations prosper and some do not (see e.g. work of Daron Acemoglu, James Robinson ) and the quality of institutions seems to be the key factor. I do not know what these authors say about globalization - but internal factors may play the more important role regarding national wealth (than external one). 

I would like you to know that I do not want to destroy the idea behind your research. I just want to brink broader perspective into the discussion.

Regards

Lenka

Globalization is an  eternal race happening between small courtiers and larger countries particularly in terms of international trade. So always there are winners and losers. Winners are large countries which could influenced the world trade (price) and losers are small poor countries who has to accept the world price anyway. 

Certainly yes, international trade is only one parameter to measure the effects of globalization. Even though there are some disadvantages for small countries in the global trade, many small countries have received tremendous benefits through globalization. The impact of technology development is greater and many countries were able to increase their production efficiency and economic development.

In my opinion no country has all the resources, technology or capital to sustain its economy grow its GDP. I think post war Japan, which had no resources worth the name followed a policy of importing raw material from all over the world (securing with suitable economic model of investment and long term contracts), importing technology and paying handsome royalty and following a very prudent trade policy leveraging exchange rate to its advantage. Of course, the work culture, quality consciousness and dedication did play a role with Government working for the business made it success. I feel this was a good example of globalization.

Hello! Just one brief comment: in the absence of globalization, China could not have become what it is today.

It is sure that China profited much from globalization. With this regards, I am now writing a paper under the title The Economics of Unbundling (See my conference paper and PPT presentation). This is not yet finished, because I am still wondering how big the effects of unbundlings were. Maybe Chinese could develop as well even if there were no direct foreign investment. Of course the growth rate may have been halved but that would be still a miracle. The main reason I am thinking of is that they could use their low wage rate as strong arms for developing their exports. When they adopted Reform and Opening-up Policy in 1978, China was technologically a matured country. Globalization must have helped their rapid development but we cannot ignore their internal conditions. 

How do you think of this opinion?

I think Lenka's answer is spot on. First, it is not very useful to discuss whether globalization is good or bad. We will not be able to turn back the clock and put the genie back in the bottle anyway. Second, the reason why so many countries are unable to bring broad benefits to a larger share of their population is not so much rooted in globalization but in their lack of rule of law, general failure of their government to even try to work for the people, institutionalized corruption and incompetence, etc.

I have worked quite extensively on rule of law as the bedrock foundation required for any real development to take place, certainly for it to be sustainable. Most of my publications are available for free download on my ResearchGate page...

@Lenka, Vekatesh, Yoshinori, Lall: The idea behind is that it depends on the Social Capital of a community if, whether and how common wealth is build up, distributed and kept. Globalization transported the promise "You can get rich as well" and as China shows - see Yoshinoris contribution - this became partly true.

Mr. Vekatesh is reclaiming a positive meaning of globalization opening the opportunity to settle down and to invest wherever you want. That was still the case in the age of colonising. That was the story of the East Indian Company and India.

Lall: There was no sample made. The Excel is attached. So this is the total result. It would be interesting to identify another group within the data. As I described in the summary of the study I only looked at the shares, not at the distribution within the country.

If we see the world as a community we have to consider how wealth is spread. For a peaceful stability a certain balance of wealth is needed. Mahinda was reclaiming the unilaterism of trade and the role of price making.

If we agree that the process of globalization was useful for most of the countries we had to explain why no developing country is among the top of the GDP-Wealth-Ratio. 

But if we take a look at the public wealth, some countries such as China, Oman, Qatar, Singapore and Russia created and kept wealth in their countries.

So one consequence while looking at these undisputable imbalances is to plead for the nationalization of assets. Once they were transfered into appartments in New York, London and Paris you can't get the them back.

Another way to reduce the imbalances would be an asset levy in the wealth centers to repay the sovereign debt of the US, Japan and the EU. After this levy there would be more capital to finance sustainable economies in developing countries.

But doing nothing will lead to a further decline of international relations.

Dear Professor Yoshinori Shiozawa, you are perfectly right: the internal resources of the Chinese economy are the sine qua non condition for China’s impressive rise. Nevertheless, globalization, in strong relationship with the so-called bamboo network and the channels of trade, technology, ideas and capital flows represented the impetus to this ascent. The “New Normal” of the Chinese economy will determine a new adaptive phase. Maybe those countries which cannot adapt to the new economic realities (as globalization means change, adaptation, successive equilibrium points) are the losers.

Frank Emmert, 

I have read your paper Rule of Law in Central and Eastern Europe 2009. Although I am not a specialist in law, your argument in the definition of Rule of Law was interesting. Economists easily use the notion Rule of Law, but it is rare to reflect what it means. Your proposal to define Rule of Law as principles addressed to authorities such as administration and the police seemed reasonable. 

The principles are concisely summed up in three requirements:

(1)Requirement for legal basis

(2)Requirement of legality

(3)Requirement of judicial review or access to justice

These requirements must be the necessary conditions when we think of Rule of Law. However, I am a bit dissatisfied with this examination, because I doubt if these are sufficient for a good functioning of a market economy. You mentioned property rights as key components and cited Douglas North. I want to repeat the above statement. It must be a necessary condition but are they sufficient conditions? 

My inquiry is connected to the notion of Social Capital which Alexander Dill mentioned several times. Indeed when Robert Putnam argued Social Capital in his book Making Democracy Work: Civic Traditions in Modern Italy (1993), Rule of Law is one of options for nations. Conflict resolution and coordination of interests can be solved by different methods. One, most prevalent in North Italy, was Rule by Law whereas another, most prevalent in South Italy, was a Patronage System (or Patron-Protégé relations). Patronage System worked quite well in medieval era. It was only in the 19th century that Rule of Law system revealed to be more efficient" (in the sense it promote economic growth) for economic development. 

Rule of Law may presuppose a level of Social Capital accumulation. Economic development depends much on people’s behavior within a range of legality. For example, if managers can trust their employees, directives can be more concise and needs no preventive clauses and so on.

Globalization is good for the winners, but bad for the loosers. Look, please, to the rankings of states and regions and You will notice that. For some countries the development is accelerating because of globalization, for some its antipode - glocalization happens. In any way, there are fields, for instance, as social security or national culture, which suffer from globalization and can disrupt at any moment. How to cope with negative globalization impact for social or cultural policies - is an open question.

Dear Yoshinori!

I just passed an online seminar (MOOC) at Oslo University where "Rule of Law" has been advocated by the Hoover Institution of Stanford University to enhance the development in developing countries.

As you know political scientists in the U.S. believe, that "Rule of Law" is happening in the Western countries especially the U.S. itself and therefore will be a blueprint for the rest of the world.

I think you're right with you assumption, that establishing a Rule of Law still requires a level of Social Capital. Or, even easier: in countries with a strong Social Capital such as in Switzerland and Denmark few conflicts end at court. The way people deal with conflicts is not by using the legal framework.

The results are extremely low transaction costs which accelerate business processes.

I don't think that the big difference between North and South Italy still exists. In both parts people invest in real estate and take up few credits.

In the charts I attached Italy was the number three in the world considering the GDP-Wealth-Ratio. Also in South Italy the real estate business of course only works in the framework of legal claims - even if you pay part of the price cash or with a barter deal.

The less people are trusting each other, the more laws they need. This old idea of the Chinese Sociologist Lao-Tsu brings us to acknowledge the paradox character of law.

Of course, in a country such as the U.S. where people cheat and lie every minute law became a religion.

So Frank Emmert is also influenced by his own culture (as I'm by the way within the cultures of trust in Switzerland, Austria and parts of Germany).

What is "culture" in this respect?

Different societies developed different forms of common action that can be called "Social Capital". In opposite to Robert Putnam (whom I admire for advocating the poor in the U.S.) I don't watch the Social Capital as a membership in networks, but more as sharing common values such as trust, solidarity, helpfulness, friendliness and hospitality.

That means: also a single person without any network can possess and therefore provide and share Social Capital.

In opposite strong social networks such as the U.S. Army or the National Rifle Association (NRA) can destroy the Social Capital of millions while reclaiming at the same time how strong they are staying together as a "successful team".

An example for missunderstood "Rule of Law": the U.S. were legaslating a law that forbidded trade with Iran. This year an American court judged the German Commerzbank to pay 1 Billion Dollar because of violating this law.In this case "Rule of Law" is only a synonymfor economic war and destruction.

So should Germany now still respect the "Rule of Law" in the U.S.?

Of course not.

Therefore I'm not convinced that "Rule of Law" may help poorer or devasteted countries because it will always be the legal justification to steal their public wealth and drag them to go to war in "coalitions against terrorism".

The example of Cuba shows that a poor country can life for decades without economic growth, Rule of Law and even under the threat of an overwhelming enemy.

The life expectancy and literacy rate is among the highest in South America.

Why? Of course because of their Social Capital.

Yes, we should investigate what the social capital is and how it works. Perhaps we must distinguish quantity and quality of the social capital. Density of links in the social network may not be a good index that reveals the quality of the social capital.

The term social capital gives us impression that it is something quantifiable. This may indicate a necessity of coining a new term instead of social capital, although I have no idea for that. 

To answer the question what countries are beneficiaries of globalisation, I believe one has to look further than at the distribution of material wealth and global GDP. Social capital is a good term, and in addition one needs to assess the impact of globalisation on both global and country-level impact on ecosystem functions and ecosystem services, caused both by over-use of natural resources and by human induced climate change and its correlations with globalisation and the restricting influence of global trade agreements on national and inter-governmental possibilities to control the use of resources and the release of greenhouse gases into the atmosphere.

Dear Raquel! Of course it was useful because it brings me to pose the following question:

- When the "neoliberalism" of Milton Friedman came up in the seventies and influenced the politics of Ronald Reagan and Margret Thatcher - wasn't the imbalance of wealth still there?

So my question was, if the promises of globalization to spread common affluence has been kept. By the way the leading Asian winners of international trade such as Taiwan, China, Singapore, Vietnam, South Korea and Japan never followed the neoliberal advices and remained in a strictly governmental controlled economy. Far beyond neoliberalism.

And would you call the Brazil politics "neoliberal"? Isn't Brazil an example for a hybrid between socialism (Bolsa) and feudalism (land owning)?

Best regards your Alexander

P.S. You may have a look at my study "Local Commons in rural Sao Paulo":

http://commons.ch/wp-content/uploads/Local_Commons_in_rural_Sao_Paulo.pdf

Dear Alexander and friends. 

In the case of China and perhaps  former soviet republics such as Russia, do not you think their gains may be related to moving away from full nationalization and allow controlled capitalism in....Before the end of the cold war(1991) China was not doing well as it was a the point of full nationalization....as it moved away from full nationalization it did better....

You may find some food for thoughts in this publication:

Respectfully yours;

Lucio

Nationalization as Privatization in Reverse: Understanding the Nature of the Commons to Identify a Possible Point of Optimal Nationalization.

https://www.researchgate.net/publication/281244564_Nationalization_as_Privatization_in_Reverse_Understanding_the_Nature_of_the_Commons_to_Identify_a_Possible_Point_of_Optimal_Nationalization

Article Nationalization as Privatization in Reverse: Understanding t...

Alexander, if you have not done so yet, you may want to look at Branko Milanovic, Global Inequality. He compares why globalization helped some countries and hurt others...

especially countries beenfit, which have either big well educated workforce and can easily produce for international markets, where wages are low. Globalization benefits countries that have low labour, environmental and social standards as these standards have impacts on production costs and what is actually happening is a 'race towards the bottom' meaning an erosion of labour, environmental and social standards.

Dear Eberhard, good day. Given your comment you may fine the following article I wrote in 2012 in those lines interesting, you may find some food for thoughts there so I will share it here:

From Traditional Sweatshops to Green Sweatshops: Is This a More Socially Friendly Strategy?

Article From Traditional Sweatshops to Green Sweatshops: Is This a M...

Respectfully yours;

Lucio

I recommend the following with respect to this question:

- Future of Life-Cycle Assessment in a Smart and/or Sustainable World

https://www.researchgate.net/publication/338327265_Future_of_Life-Cycle_Assessment_in_a_Smart_andor_Sustainable_World?_sg=g0BM2_3Co09ATb3YNGmKy_tB1tB8ybiENo7OdBB2gFo8drBJ3iOFMtDLGYos2cgdfTN-fWVlLkLAIuaniAbpTg-_UlujQRbWVFwPZWLP.cX90sTtsr07qErzgxugoWS4L1EbC6K0TIl6anNGZeClcP4xArQPROzLP4RHkT7DqzfF7h1RDeD381gCJWGPnOQ

- Internet of Things and the Future of Life-Cycle Assessment in Smart World

https://www.researchgate.net/publication/325871906_Internet_of_Things_and_the_Future_of_Life-Cycle_Assessment_in_Smart_World