Module 3 Topic 1 1

Module 3 - Topic 1: Economic dimension of globalization: Theoretical considerations

At the end of the lesson, you should be able to:

a. explain briefly the main argument of the golden arches theory and the dell theory
of conflict prevention;
b. differentiate spaceship from cowboy economics;
c. make a reflection on the lifestyle that is promoted by spaceship and cowboy
economics; and,
d. Identify the principles of spaceship economics that are aligned with the 17 UN
SDGs.

Key Concepts to Understand

cowboy economics Dell theory of conflict prevention
Golden arches theory spaceship economics

The Golden Arches theory of conflict prevention. No two countries that both had
McDonald’s had fought a war against each other since each got its McDonald’s. … (Border
skirmishes and civil wars don’t count, because McDonald’s usually served both sides.) (Friedman,
2000) For example, China and Vietnam may have a conflict over the Paracel Islands in the South
China Sea, but they had not used war to solve the conflict. Both countries host McDonald food
chains. The theory however does not refer literally only to McDonalds but also to other
businesses like Nike and Adidas that manufacture foot gears in both countries. In short,
McDonalds represents foreign businesses that commonly operate in different countries that may
have some political tensions. Russia’s invasion of Ukraine though could be an exemption from
this theory. The presence and operation of American and European global corporations in both
countries did not stop Putin from invading Ukraine, unmindful of the invasion’s consequences to
Russia’s economy. The long term goals of Putin is to gradually annex Ukraine by supporting
secessionist groups to separate pro-Russian local government units from Ukraine, to acquire
the untapped and undeveloped gas and oil reserves of Ukraine particularly in its exclusive
economic zone in the Black Sea, and to weaken Ukraine and install a pro-Russian government
in order for Ukraine not to be a member of the European Union and the military security
organization - North Atlantic Treaty Organization (NATO) which is led by America - by not being
a member, Ukraine will forever be a buffer zone between NATO countries and Russia ensuring
Russia’s national security.

The Dell theory of conflict prevention. No two countries that are both part of a major
global supply chain, like Dell’s, will fight a war against each other if they are both part of the
same global supply chain. Because people embedded in major global supply chains don’t want
to fight old-time wars anymore. They want to make just-in-time deliveries of goods and services
– and enjoy the rising standards of living that come with that. (Friedman, 2006)
Cowboy vs. Spaceship Economics. The first two industrial revolutions were guided by
cowboy economics which is characterized by massive extraction of resources for mass
production of goods for a bigger market and earning big profit. This supports the maxim, “Big is
beautiful.” However, the environmental consequences of rapid industrialization and the widening
gap between the urban and rural areas, between the capitalists and the working class, and
between the Global North (rich countries) and the Global South (poor countries) gave rise to an
alternative system which is called spaceship economics (promoted in IR 3.0 and IR 4.0) that is
characterized by the sustainable use and management of resources. It is guided by the maxim,
“Small is beautiful.” Korten (1990) summarized the contrasting features of the two systems.
 Module 3 Topic 1 2

BASES Cowboy Economics Spaceship Economics

Policy ● increasing economic ● seek economic diversification at all
orientation/ specialization to concentrate levels of the economy, beginning with the
preferences productive resources on those rural household, to reduce dependence
products and services in and vulnerability to the market shocks
which the country has a that result from excessive specialization.
comparative advantage in the
international marketplace

● making investments that ● give priority in allocating to the

support the rapid extraction of production of goods and services to
resources for export to increase meet the basic needs of the local
foreign exchange earnings population
● allocate a portion of surplus local
productive capacity (beyond what is
required to meet local basic needs) to
produce goods and services for export
to national or international markets
● mobilizing foreign loan ● give priority to the mobilization of local
financing for large-scale capital resources, savings and social energy.
investments Avoid dependency creating debt
● fully utilizing available foreign financing, particularly foreign debt,
loans to stimulate the domestic except for clearly productive purposes
economy that will generate the resources for
repayment

● concentrating capital in large ● favor industrial investments that:

units to achieve the economies- strengthen diversified small and
of-scale needed to compete in intermediate scale production; use
foreign markets environmentally sound, resource-
● minimizing restrictions on conserving, labor-using technologies;
private investors, both foreign add value to local resources and
and domestic products; serve and enhance competitive
efficiency with domestic markets; and
strengthen backward and forward
linkages within the economy
● give preference to advanced
information-intensive technologies
over those that are materials-intensive
and resource-depleting
● provide economic incentives that
favor recovery and recycling over
extraction and exploitation

● encouraging the flow of labor ● favor intensive, smallholder

out of agriculture and into the agriculture based on the use of high
cities to ensure an adequate productivity bio-intensive technologies
labor supply for industrialization
 Module 3 Topic 1 3

● keeping labor cost low to ● give high priority to investments in

provide an attractive climate for education that build capacity of people
foreign investment and to to take charge of their own lives,
maintain international communities and resources and to
competitiveness participate in local, national and global
decision processes

● postponing political ● encourage the development of a

development (democratization) dense mosaic of independent,
so that government can politically conscious voluntary and
undertake the measures required people’s organizations that strengthen
to meet the needs of economic the direct participation of citizens in both
growth before being subjected to local and national decision-making
populist demands that may divert processes, and provide essential training
resources from productive uses grounds in democratic citizenship
● establish transparency in public
decision making and strengthen
communication links between people
and government
● encourage an acceptance of shared
responsibility for the well-being of all
community members and a reverence
for the connection between people and
nature

Beliefs ● The earth’s physical ● The earth’s physical resources are

guiding resources are for all practical finite.
actions purposes inexhaustible.
(Science will come up with
suitable substitutes for any
resource that becomes
exhausted or prohibitively
expensive to recover.)

● The environment has a virtually ● The productive and recycling

infinite ability to absorb waste. capacity of ecological systems can be
enhanced through human
intervention, but this enhancement
cannot exceed certain natural limits.

● Poverty is simply the result of ● When the people control the local
inadequate growth, which in environmental resources on which their
turn results from inadequate own and their children’s lives depend,
capital investment. they are more likely than absentee
● Those workers who are owners to exercise responsible
displaced from agriculture or stewardship.
other rural resource-based
occupations, such as fishing, by
productivity enhancing capital
investments will be readily
absorbed in industrial
 Module 3 Topic 1 4

employment in urban centers.

● The international markets in ● Just, sustainable and inclusive

which a country is competing are communities and the resilience and
freely competitive without stability of the larger national and global
subsidies or restraints that give economies
competitors from some countries
an advantage over others.
● Foreign borrowing is used for
productive capital investments
that will generate foreign
exchange for repayment.
● Market forces will automatically
distribute development benefits.

Value ● It is strongly biased toward ● The priority in the use of earth’s

orientations the wants of affluent consumers resources should be to allow all people
– especially foreigners, to the an opportunity to produce a basic
neglect of the needs of livelihood for themselves and their
domestic consumers – families.
especially the poor. ● Local economies should be
diversified and reasonably self-reliant
in producing for basic needs.

● Current generations have no right to

● It undervalues natural engage in levels of nonessential
resources and discourages consumption that deprive future
resource conservation. generations of the possibility of
● It values equally any increase sustaining decent human living
in economic activity, standards.
irrespective of whether it is
sustainable or contributes to
improved human well-being.
● Every individual has the right to be a
● It assumes that the laborer productive contributing member of
exists to serve the economy, family, community and society.
rather that the reverse. ● People have a right to a voice in
making the decisions that influence
their lives and decisions making should
be as close to the level of individual,
family and community as possible.
● Local decisions should reflect a
global perspective and an acceptance
of the rights and responsibilities of
global citizenship.

● Control of productive assets should

● It legitimates the be broadly distributed within society.
concentration of ownership of ●Sovereignty resides in the people. The
productive assets in corporate authority of the state is granted by the
structures that separate the people and therefore may be withdrawn
 Module 3 Topic 1 5

control of these assets from the by them.

communities that depend on
them.

The features of cowboy economics are reiterated by the elements of neoliberalism. In

the film, The Corporation, you learned that marketers promote a way of life that spells big profit.
And that is a materialist and consumerist way of life or affluenza. Once you embrace the way of
life that is promoted, you will be motivated to buy their products and services. As stated in the
film, the main target of the marketers in their ad campaigns are the children considering their
vulnerabilities and their ability to nag their elders whether consciously or unconsciously.

The features or principles of the spaceship economics are aligned with the 17 UN
Sustainable Development Goals (SDGs) the four interrelated principles of which are as follows:
respect Earth and life in all its diversity; care for the community of life with understanding,
compassion and love; build democratic societies that are just, participatory, sustainable and
peaceful; and, secure Earth's bounty and beauty for present and future generations.