Unit 1: Historical and Contemporary
Overview of Globalization
Part 1: Before the World
Wars
We can begin with a
descriptive definition: globalization means economic integration.
It means that nominally independent people, places, and
institutions become economically important to each other.
Japan’s banking sector depends upon the value of US
Treasury Securities, which in turn depends upon the competitiveness
of US manufacturers, which in turn depends upon the costs
of intermediate goods imported from Mexico, and so on. It
also means change outside of the strictly economic realm—in
the political and cultural realms, for example. (Think:
the European Union, animé on the Cartoon Network,
anti-war protesters also collaborating to stop human rights
abuses in China.) Moreover, globalization is not a new process;
it has been fundamental to the modern world economy since
at least the late 16th century, when the age of mercantile
colonialism began. The founding the Americas and the development
of the slave trade, upon which much of early modern European
development was based, were fundamentally global in the
sense we use the term today. Cross-border trade and fancy
financial instruments to avoid the authority of the Roman
Emperor were common during the Roman Empire. So globalization
is not new: whenever we are talking about freer flows of
capital, goods, and labor, about closer interdependence
between geographically and culturally distant people, we
are talking about globalization.
WEBSITE:
For more information about trade during the Roman Empire,
click on to:
Roman Empire
http://www.unrv.com/economy.php
Many understand globalization from the perspective of the
last thirty or so years, an era marked by consistent efforts
by many industrialized countries to deregulate national
and international commerce. This period does stand in contrast
to the previous forty years, during which time governments
were somewhat reluctant to leave the market to take care
of itself in any fundamental way. But that period—from
the Great Depression until the 1970s—should be understood
as the exception, not the rule. Indeed, the present period
of globalization has more in common with the period before
the First World War (1870–1914) than the period after
the Second World War.
WEBSITE: For a view of the Great Depression
by economist Robert Samuelson, log onto:
Great Depression
http://www.econlib.org/library/Enc/GreatDepression.html
Of course, the late 19th-century experience of an expanding
market was very different from our own. At that point, the
economy was not wholly coextensive with the market, even
in developed countries. Many commodities we take for granted
were not even commodified then: many kinds of food, finished
clothing, water, child and elderly care, and medical services
(such as childbirth) were handled with the unpaid labor
of family members or friends, or they were paid for in kind,
rather than cash. This is to say nothing of the experience
of the subjects of colonialism, with whose unpaid labor
and seized natural resources European progress continued
apace. So when we talk about late 19th century liberalization,
we should keep that in mind.
Nonetheless, railroads had really made internal markets
national in the late 19th century. And the steam engine
made international shipping much more feasible and profitable—it
made the world smaller for commercial purposes by facilitating
migration and trade. Finally, the telegraph fundamentally
changed communication, inaugurating an era of (relatively)
high-speed information exchange and encoding.
But the relative freedom of the economic world at that moment
depended on two other related things: a (once again, relatively)
stable international payments system and a leading military
power. The payments system at that point was anchored by
gold, and the British served as military leader. Both of
these conditions unraveled after World War I. By the beginning
of the Second World War, the US had overtaken Great Britain
as the world’s military and financial leader, and
the gold standard had been abandoned. In the period between
the wars, and for various reasons, much of the world became
skeptical about the virtues of untrammeled market forces
and the liberalizing impetus was temporarily put on hold.
We should keep in mind, however, that even “free markets”—like
those of today or of the late 19th century—rely on
the power of economic, political, and military institutions.
