Conflict, or critical, theory is an approach to analyzing society that stresses the differences in power among social groups. This can be applied to classes within societies, or even to countries within the global economic and trading system. When conflict theory is applied to global politics, this same scheme is followed: the poorer countries of the world are contrasted with the wealthy ones. The wealthy create the rules that are then forced upon the poor.
The basic structure of conflict theory derives from theories of socialism. It holds that the social structure of societies cannot be understood unless power and money are taken into account. After World War II, the United States laid out the rules of globalization, attempting to enforce global free trade, the dominance of the dollar and the importance of American military might worldwide. Modern “globalization,” and the ideas behind it, stems from the American domination that ensued and its effects.
The progression of globalization and the creation of the “third world” comes from the postwar globe between 1950 and 1970, at the time when the third world had become independent from colonial rule. But this independence was soon to be lost as the third world realized that only with access to advanced capital, education and machinery were their economies to develop. The third world did not itself have the expertise nor the technical acumen that the industrialized states did, and therefore, required oversight from the developed nations as a means for their own internal progress and industry. This also meant that most states in the developing world became dependent on their former colonial masters in a different way than they had been in the past, since only the advanced states, such as the US, France or Russia, possessed the basic mechanical and technological wherewithal that they needed. Therefore, in their drive to become independent and develop economically, the third world became more deeply entrenched in colonial relations.
All societies and trading systems are based on laws and rules. But only the powerful have the ability to impose these laws, and conflict theory assumes that the powerful impose them based on their own financial self-interest. It thinks that the laws of the global trade system are not morally legitimate because the poor states do not have the authority to modify the rules of the game. Legal legitimacy, at a minimum, requires that all persons effected by the law have a voice in its composition. Since the third world (with some notable exceptions such as the oil-producing states) has no voice, the law is solely the creation of the wealthy, and hence lacks all moral legitimacy.
Critical theory approaches globalization with a strongly critical eye. In simple terms, it views the global trading system as operating according to the interaction between producers and suppliers of raw material in the global South and advanced industry in the North. Southern countries, generally termed the “third world,” supply the raw materials that are turned into finished goods by the northern advanced states. These goods are then sold back to the third world at a high profit, causing the developing world to be dependent and distorted in its economic life. Critical theory uses this framework to better understand globalization in hopes of changing it.
The basic conflict in globalization, according to this school, is based on dependency. From its perspective, third world states need the advanced world for investment, capital, loans and markets. Simply put, this puts the third world at a constant disadvantage, and their economies are created and recreated in order to better serve the wealthy states and the banks that finance globalization. Dependency and distortion in local developing economies are the result, and national independence is sacrificed for the sake of having a small part of the global economic pie.