1.Introduction

In the 21st century, globalization refers to the increasingly close interdependence between the economies, cultures, and populations of countries around the world. With the increasing flow of people, capital, goods, services, and information across borders, the world is becoming increasingly interconnected [1]. Globalization has a profound effect on practically every facet of modern life, from social and cultural exchanges to technical advancement and economic growth, which is why it is so significant in today’s society.

The foundation for contemporary globalization was established by the historical processes of colonization, industrialization, and the Age of Discovery. Global trade networks were initiated during the Age of Discovery, and the capitalist economy was established throughout the 18th and 19th centuries during the process of industrialization [2]. By exploiting labor and resources, European colonialism aided in the growth of global capitalism and made economic inequality worse. The bourgeoisie gained money by forsaking the interests of the aristocracy, while possibilities for the working class and peasants deteriorated. These changes had an impact on the social class structure. Since then, the creation of a transnational bourgeoisie and the concentration of wealth in the hands of a few number of individuals worldwide have caused globalization to alter the conventional class structure. Social inequality has increased as a result of changes in how possibilities for global economic growth are distributed.

This essay will examine how nation-state social class disparities are made worse by the capitalist economic system, which also encourages globalization. The research will thoroughly examine how globalization affects labor exploitation, wealth concentration, and the authority of the welfare state, demonstrating how it modifies and intensifies the inequalities of modern social stratification. This essay examines these particular processes in detail in an effort to clarify the intricate connection between globalization and the growing class divide in contemporary society.

2.Capitalist Economic Structures and Globalization

A capitalist economy is characterized by private ownership and control of property, where individuals and businesses operate in their own self-interest to make a profit. Prices are determined by the forces of supply and demand in the market, which helps allocate resources efficiently. Capital assets like factories and railroads are privately owned, labor is exchanged for wages, and profits are retained by private owners. Unlike socialism, where the state owns the means of production and prioritizes social good, capitalism relies on voluntary exchanges driven by rational self-interest to foster economic prosperity [3]. Multinational companies (MNCs) are vital to this capitalist system because they propel the enormous cross-border capital flows and greatly influence the world economy. Multinational corporations (MNCs) are significant forces behind the expansion and development of the world economy. They promote local economies by generating large amounts of job possibilities, promoting economic development, and drawing large amounts of foreign direct investment. MNCs open up markets and promote global business by integrating markets through imports and exports. Their R&D and technology transfer investments foster innovation and increase the competitiveness of regional industry. Furthermore, MNCs are essential to environmental sustainability because they employ energy-saving, water-saving, and carbon-reduction strategies. By assisting with initiatives related to sustainable development, healthcare, education, and global value chains, they also promote cooperation in the pursuit of common sustainability objectives [4].

The strong influence of multinational corporations on a global scale is closely linked to the widespread dissemination of capitalism through globalization, which mainly relies on the expansion of free markets and the implementation of neoliberal policies. Neoliberal policies such as privatization, deregulation, and reduced government intervention [5], have enabled multinational corporations to operate more freely in the international market. The global capitalist process has been further aided by this policy change, which has increased the movement of capital, goods, and services across international borders. Higher levels of foreign investment, economic expansion, and more economic integration of these nations into the global economy are generally the results of neoliberal policies [5]. Therefore, the growth of multinational corporations is closely related to the global spread of capitalism, and the two are mutually reinforcing, strengthening the increasingly close global economic ties under neoliberal reforms.

The focus placed by capitalism on privatization, deregulation, and less government assistance has resulted in changes to the national economy. Reducing benefits is consistent with the capitalism idea of depending on the market, but privatization also improves market efficiency by transferring management of state-owned businesses to the private sector and loosening rules. These policies may increase economic development, but by decreasing the role of the state in social security, they may also worsen economic inequality and erode social safety nets.

There are notable distinctions between state-led and large firm capitalism [3] when examining how capitalism affects regional labor markets and domestic industries. Under a state-led capitalism system, the government creates regulations, offers subsidies, and puts protective measures in place to help local businesses. The objectives of this intervention are to support the growth of important industries and improve the competitiveness and economic stability of domestic industry. Government assistance can boost the economy and give stability, but because it lessens the strain of market competition, it may also result in poor efficiency and little innovation. In contrast, a few number of very big companies control a huge portion of the market in large company capitalism. This tendency of market concentration may result in economies of scale, which will propel technical advancement and industrial growth. However, this concentration may also suppress market competition and limit the growth of small and medium-sized enterprises. However, their hegemony has the potential to stifle competition, drive out smaller businesses, and stratify the labor market so that salaries and job security are concentrated in the hands of big businesses, while smaller businesses and displaced workers suffer more volatility. Therefore, even if each model has benefits, local labor markets and domestic businesses face unique obstacles as a result of these models.

3.Impact on Social Stratification within Nation-States

3.1.Labor Market Transformations

Globalization and capitalism economic systems have changed labor markets, resulting in notable changes in social stratification. The deverticalization or fragmentation of industrial processes is one of the most noticeable shifts. Vertically integrated companies used to handle all facet of production in-house, from raw materials to finished items. On the other hand, in recent years, non vertical manufacturing (i.e. outsourcing different production stages and component procurement to different countries) has become increasingly common. This approach has led to extreme fragmentation of the global supply chain. For example, the memory of an Apple iPhone may be manufactured in Korea, the display screen in Japan, the processor in Taiwan, and the final assembly in China. In order to support these complex and decentralized supply chains, strong logistics and transportation networks have significantly expanded global trade.

Paul A. Samuelson, the winner of the Nobel Prize, devised the Factor-Price Equalization Theorem, which helps explain the economic effects of these changes. According to the theorem, in a world of unrestricted free trade and no transportation costs, the costs of similar production inputs, such unskilled labor, will eventually equalize across nations and converge at the lowest possible level [6]. For low-skilled labor, this has very serious ramifications as it implies that, as a result of global competition, their salaries would not only remain stagnant but may potentially decrease.

Throughout the past few decades, this dynamic has become more and more apparent. While the earnings of trained professionals, engineers, and information technology workers have increased dramatically, blue-collar wages have often stagnated or even fallen [6]. Unskilled workers in industrialized nations have been disproportionately affected by the globalization and free trade-driven equalization of salaries at lower levels, which has exacerbated income inequality. This pattern demonstrates the increasing polarization of the labor market, in which people with more education and skill enjoy increased pay and job security, while individuals with less education and skill suffer stagnant or decreasing pay and increased financial insecurity.

3.2.Capital Mobility and Wealth Concentration

Globalization-induced capital movement allows businesses to outsource services and manufacturing to nations with less labor costs, which has a significant effect on the labor markets of high-cost nations. For instance, a large number of manufacturing jobs in Europe have been moved to Bangladesh and Vietnam, which has resulted in lower wages and increased unemployment for those who were formerly employed in these sectors. However, in the once-wealthy industrial communities like Manchester saw a spike in unemployment and widespread plant closures as a result of numerous manufacturing companies moving their production lines to less expensive locations.

Furthermore, developing economies in East Asia have become the new center of gravity for the global economy, replacing established superpowers like the United States and Western Europe. China’s swift economic expansion, for example, demonstrates this change. Just 3.1% of the world’s GDP came from China in 1970; by 2015, that percentage had risen to 14.8% [7]. This change emphasizes how the dynamics of power and money are shifting globally, which adds to the accumulation of wealth within a global elite that gains from these economic changes.

4.Role of the Nation-State in Mitigating or Exacerbating Inequality

4.1.State Policies and Social Welfare

Social and economic inequality can be greatly influenced by a nation’s laws and welfare policies. Nordic nations, like Sweden and Norway, have successfully lowered economic inequality and encouraged social mobility by enacting high taxes and offering generous social services. Their governments also provide free public healthcare, universal public education, and generous unemployment benefits, which have significantly reduced the social wealth gap and given all citizens equal opportunities.

The Anglo American model countries, the United States and the United Kingdom, for example, generally reduce government intervention and taxation, which frequently results in growing economic disparities and decreased social mobility. For instance, in the United States, income inequality is still very severe despite the country’s robust economic development, with the wealth of the wealthy increasing at a rapid rate while the growth of middle-class and lower-class incomes is relatively slow. The country’s flawed social security system, in addition to the high costs of healthcare and education, make it more difficult for low-income families to receive the support they need.

4.2.State Responses to Global Economic Pressures

While different nations have taken different approaches to the challenges posed by globalization, some favoring free trade, others enacting restrictive measures. Investing in healthcare, education, and social services is essential for reducing social inequality regardless of a nation’s stance on economic globalization. For instance, Germany has successfully countered the negative effects of globalization on social classes by instituting a robust social security system, universal healthcare, and a high-quality education system, actions that not only provide social security in the short term but also yield long-term economic and social benefits by raising labor standards and boosting labor skills. Similar to this, Denmark’s welfare system efficiently closes the socioeconomic divide by promoting social mobility and offering all citizens access to sufficient medical, educational, and social support.

5.Case Studies

5.1.United States

The United States provides a clear illustration of how globalization and capitalism worsen economic inequality and the fall of the middle class. Globalization has led to a large number of manufacturing jobs being moved to nations with cheaper labor costs, including China and Mexico. As a result, American manufacturing workers are experiencing more unemployment and lower wages. Meanwhile, although the rapid growth of the service industry has created job opportunities on the surface, these new positions often have lower salaries and lack stability, such as part-time positions in the retail and catering service industries. With the financial and technological industries dominating the economy and class structures, wealth has grown concentrated among the top 1% of earners. The gains of overall economic expansion have not been properly dispersed, which has resulted in a growing divide between the rich elite and the general populace. While the wealthiest 5% of Americans control over 60% of income and possess one-third of the nation’s wealth, their proportion has been gradually rising over the past few decades [8].

5.2.China

Although millions of people have been lifted out of poverty by China’s fast economic growth in recent decades, social inequality has also increased, notably between urban and rural areas. Significant economic advantages have resulted from the nation’s integration into the global economy, which has been fueled by industrialization and urbanization. However, these benefits have primarily benefited those with access to education and skills as well as those living in coastal cities. However, inland rural communities have not kept up with this development, which has resulted in significant differences in living conditions and income.

The imbalances caused by globalization are intimately related to this phenomena. China has imposed policies that have promoted the quick growth of the southeast coastal areas in order to take use of their advantages, geographic, human, and financial, ever since economic reforms were instituted. Although export-oriented economies have benefited greatly from these policies, they have also highlighted the regional disparities exacerbated by globalization by widening the development gap between interior and coastal communities, especially in the western regions.

6.Conclusion

The twenty-first century has seen a rapid development of globalization, which, combined with the speed at which technology is developing and the ease of transportation, has resulted in a constantly shifting global trade structure. As globalization has steadily progressed, the capitalist economic structure has become more stable, which has had a profound effect on social inequality; under globalization, the labor market has undergone transformation, the employment pattern has been reshaped, and technological advancements and capital flows have further exacerbated this impact. The shift from manufacturing to service industries and the disintegration of global supply chains have weakened the employment stability of low-skilled workers, while the growth in capital flows has further concentrated wealth in the hands of a small number of elites.

While various nations have responded to these difficulties in different ways, ensuring people's living standards through strong social welfare programs and practical legislative guarantees should be the shared objective. A variety of tactics, such as bolstering the social security system, controlling capital flows, and guaranteeing ethical labor practices, are required to solve these problems. In order to create a more just and inclusive society, future efforts should concentrate on developing a more equitable globalization, giving social welfare and economic justice first priority, and encouraging international collaboration.