First World
First World is used less, but is no less useful as a term, than the commonly
foundThird World, which describes the underdeveloped nations of Africa,
Asia and Latin America. The First World consists of the Western European and
North American countries which experienced the Industrial Revolution, plus
Japan, Australia and New Zealand: in effect, the advanced industrial powers of
the period before the First World War. The Second World used to refer to the
communist bloc, much of it by now as industrialized as the First World, but on
the basis of a different blueprint for economic organization. Membership of
the Third World is therefore defined more by the dates at which political
independence was achieved and economic growth started than by the actual
level of economic development, although in much of the Third World this is in
fact extremely low. The classification is very crude, and throws up many
anomalies. Can Argentina, for example, be classified as a Third World country
when it has much the same level of economic development as New Zealand,
and was politically independent earlier? Did Russia move from being a First
World nation to the Second World simply because of its political change in
1917, and did it move back again in 1991? Like all simple classifications in
politics or political science, this one needs to be used very cautiously, but it is
certainly a convenient portmanteau term. In an era whenglobalizationhas
become enormously important, perhaps even more in analysis and theory than
in reality, it may be that categorizations such as this will come to have even less
utility than in the past.
Fiscal Policy
Fiscal policy is one of the two major weapons governments have for
controlling the economy, the other being monetary policy. Though they
are interlinked, it is possible to separate them analytically, especially if
monetary policy is defined primarily as controlling themoney supply. Fiscal
policy concerns the government’s revenue raising and expenditure plans, and
operates primarily by raising and lowering tax rates and increasing or
decreasing public expenditure to control the size of the governmentdeficit
or surplus. Because taxes actually exist primarily to pay for expenditure, and
expenditure is carried out primarily to produce public goods, fiscal policy
often conflicts with the primary aims of government but, equally, even if a
government has no intention of controlling the aggregate economy, and has
no overt fiscal policy, it cannot avoid having ade factoone. During the 20th
century attitudes to the use of fiscal policy, and beliefs about the primary aim
of such policy, have varied. Until the economics ofKeynesianismbecame
First World