The Making of a Global World

    Globalization (or globalisation) is the process of international integration arising from  the interchange of world views, products, ideas and other aspects of culture.

  ‘Globalisation’ refer to an economic system that has emerged since the last 50 years or so.

   However the making of the global world has a long history – of trade, of migration, of people in search of work, the movement of capital, and much else.

    Globalisation in Ancient Times

     From ancient times, travellers, traders, priests and pilgrims travelled vast distances for knowledge,opportunity and spiritual fulfilment, or to escape persecution. They carried goods, money, values, skills, ideas, inventions, and even germs and diseases.

    Example 1

     As early as 3000 BCE an active coastal trade linked the Indus valley civilisations with present-day West Asia.

    Example 2

     For more than a millennia, cowries (the Hindi cowdi or seashells, used as a form of    currency) from the Maldives found their way to China and East Africa.

    Example 3

     Silk Route (Silk Routes Link the World)

     The silk routes are a good example of vibrant pre-modern trade and cultural links between   distant parts of the world. They are known to have existed since before the Christian Era    and thrived almost till the fifteenth century.

     Chinese pottery and silk cargoes travelled the same route, as did textiles and spices from    India and Southeast Asia.

     In return, precious metals – gold and silver – flowed from Europe to Asia.

    Example 4

     Food travels: Food offers many examples of long-distance cultural exchange. Traders and travellers introduced new crops to the lands they travelled.

     It is believed that noodles travelled west from China to become spaghetti.

     Perhaps Arab traders took pasta to fifth-century Sicily, an island now in Italy.

      In India many of our common foods such as potatoes,soya, groundnuts, maize, tomatoes, chillies, sweet potatoes, and so on were not known to our ancestors until about five centuries ago. These foods were only introduced in Europe and Asia after Christopher Columbus accidentally discovered the vast continent that would later become known as the Americas. (Here we will use ‘America’ to describe North America, South America and the Caribbean.)

    Irish potato Famine

     After introduction of potato in Ireland, Ireland’s poorest peasants became dependent on potatoes.

     When disease destroyed the potato crop in the mid-1840s, around 1,000,000 people died of starvation in Ireland, and double the number emigrated in search of work.

    Conquest, Disease and Trade

     The pre-modern world shrank greatly in the sixteenth century after European sailors found a sea route to Asia and America.

    Example 1: America

     Before its ‘discovery’, America had been cut off from regular contact with the rest of the world for millions of years.

     The Portuguese and Spanish conquest and colonisation of America was decisively under way by the mid-sixteenth century.

     Peru and Mexico enhanced Europe’s wealth and financed its trade with Asia.

     Legends spread in seventeenth-century Europe about South America’s fabled wealth. Many expeditions set off in search of El Dorado, the fabled city of gold.

     European conquest was not just a result of superior firepower. In fact, the most powerful weapon of the Spanish conquerors was the germs such as those of smallpox. Because of long isolation, America’s original inhabitants had no immunity against these diseases that came from Europe. It killed and decimated whole communities, paving the way for conquest.

     John Winthorp, the first governor of the Massachusetts Bay colony in New England, wrote in May 1634 that smallpox was God’s blessing for the colonists

    Example 2: Europe

     Until the nineteenth century, poverty and hunger were common in Europe. Cities were crowded and deadly diseases were widespread.

     Religious conflicts were common, and religious dissenters were persecuted. Thousands therefore fled Europe for America.

    Example 3: Africa

     Slaves captured from Africa were auctioned in Europe and later transported to America to work in plantations for growing cotton and sugar for European markets.

     Note: Until well into the eighteenth century, China and India were among the world’s richest countries.

     However, from the fifteenth century, China is said to have restricted overseas contacts and retreated into isolation. Europe now emerged as the centre of world trade.

    The Nineteenth Century (1815-1914)

     Economists identify three types of movement or ‘flows’ within international economic exchanges.

     1. The flow of trade:  In nineteenth century referred largely to trade in goods (e.g., cloth or wheat).

     2. The flow of labour – The migration of people in search of employment.

     3. The movement of capital:  Short-term or long-term investments over long distances.

    I. Corn Laws

     Population growth from the late eighteenth century had increased the demand for food grains, pushing up food grain prices in Britain.

     Under pressure from landed groups, the government also restricted the import of corn. The laws allowing the government to do this were commonly known as the ‘Corn Laws’.

     Unhappy with high food prices, industrialists and urban dwellers forced the abolition of the Corn Laws.

     Later  the Corn Laws were scrapped, food could be imported into Britain more cheaply than it could be produced within the country.

    Result

     Vast areas of land were now left uncultivated, and thousands of men and women were thrown out of work. They flocked to the cities or migrated overseas.

     Around the world – in Eastern Europe, Russia, America and Australia – lands were cleared and food production expanded to meet the British demand. (Flow of Trade)

     For transportation Railways were needed to link the agricultural regions to the ports. New harbours had to be built and old ones expanded to ship the new cargoes. All these activities in turn required capital and labour. Capital flowed from financial centres such as London. (Flow of Capital)

     The demand for labour in places where labour was in short supply – as in America and Australia – nearly 50 million people emigrated from Europe to America and Australia in the nineteenth century. (Flow of Labour )

    II. Canal colonies (West Punjab)

     In India British government built a network of irrigation canals to transform semi-desert wastes

     into fertile agricultural lands that could grow wheat and cotton for export. Thus by 1890, a global agricultural economy had taken shape. (Flow of Trade)

    Role of Technology in Globalisation

     Colonisation stimulated new investments and improvements in transport: faster railways, lighter wagons and larger ships helped move food more cheaply and quickly from faraway farms to final markets.

    Example: refrigerated ships

     Till the 1870s, animals were shipped live from America, Australia or New Zealand to      Europe

     Drawbacks

     1.live animals took up a lot of ship space.

     2.Many also died in voyage

     3.fell ill, lost weight, or became unfit to eat.

     4. Meat was hence an expensive luxury beyond the reach of the European poor.

     After 1870s, the development of a new technology, namely, refrigerated ships,  animals were slaughtered for food at the starting point – in America, Australia or New Zealand – and then transported to Europe as frozen meat.

    Late nineteenth-century Colonialism

     If we look at the map of Africa it can be seen that some countries’ borders run straight, as if they were drawn using a ruler. Well, in fact this was almost how rival European powers in Africa drew up

     the borders demarcating their respective territories. In 1885 the big European powers met in Berlin to complete the carving up of Africa between them.

     Belgium and Germany became new colonial powers.

     The US also became a colonial power in the late 1890s by taking over some colonies earlier held by Spain.

    Rinderpest, or the Cattle Plague

    Coming of Rinderpest

     In Africa, in the 1890s, a fast-spreading disease of cattle plague or rinderpest is an example of the widespread European imperial impact on colonised societies.

     Rinderpest arrived in Africa in the late 1880s. It was carried by infected cattle imported from British Asia to feed the Italian soldiers invading Eritrea in East Africa.

     Entering Africa in the east, rinderpest moved west ‘like forest fire’, reaching Africa’s Atlantic coast in 1892. It reached the Cape (Africa’s southernmost tip) five years later. Along the way rinderpest killed 90 per cent of the cattle.

    Spread of Rinderpest

    Result

     The loss of cattle destroyed African livelihoods. Planters, mine owners and colonial governments  forced Africans into the labour market.

    Indentured Labour Migration from India

     Indentured labour – A bonded labourer under contract to work for an employer for a specific amount of time, to pay off his passage to a new country or home.

     In the nineteenth century, hundreds of thousands of Indian and Chinese labourers went to work on plantations, in mines, and in road and railway construction projects around the world.

     Main areas of migration from India: eastern Uttar Pradesh, Bihar, central India and the dry districts of Tamil Nadu.

    The main destinations of Indian indentured Migrants:

     1.Caribbean islands (mainly Trinidad, Guyana and Surinam),

     2.Mauritius and Fiji.

     3.Closer home, Tamil migrants went to Ceylon and Malaya.

     4. Indentured workers were also recruited for tea plantations in Assam.

    Situation at destination:

     On arrival at the plantations, labourers found conditions to be different from what they had imagined. Living and working conditions were harsh, and there were few legal rights.

     Nineteenth-century indenture has been described as a ‘new system of slavery’.

    Ways of survival

     Many of them escaped into the wilds, though if caught they faced severe punishment.

     Others developed new forms of individual and collective self-expression, blending different cultural forms, old and new.

     Example:

     Trinidad the annual Muharram procession was transformed into a riotous carnival called ‘Hosay’ (for Imam Hussain) in which workers of all races and religions joined.

     The protest religion of Rastafarianism (made famous by the Jamaican reggae star Bob Marley) is also said to reflect social and cultural links with Indian migrants to the Caribbean.

    Note:

    How did Rastafarianism begin?

     Rastafarianism is a very new religion. It began in 1930 in Jamaica. A  Jamaican, predicted there would be a black messiah in Africa. As it turned out Ras Tafari, a prince, became Emperor of Ethiopia in 1930. As emperor he was called Haile Selassie but the name Rastafarianism comes from his name, Ras Tafari.

What do Rastafarians believe?

     They believe that Ethiopia is their promised land. They hope one day to return there just as the Israelites returned to the promised land after being slaves in Egypt and Babylon. Rastas believe that God took human form first as Christ the messiah then as Ras Tafari, the black messiah.

    ‘Chutney music’:

     ‘Chutney music’, popular in Trinidad and Guyana, is another creative contemporary expression of the post-indenture experience. These forms of cultural fusion are part of the making of the global world, where things from different places get mixed, lose their original characteristics and become something entirely new.

    Indian descendents

     There are large communities of people of Indian descent in these Caribbean Islands.

    Examples:

     Nobel Prize-winning writer V.S. Naipaul, West Indies cricketers Shivnarine Chanderpaul and Ramnaresh Sarwan.

    Note: From the 1900s India’s nationalist leaders began opposing the system of indentured labour migration as abusive and cruel. It was abolished in 1921.

    Indian Entrepreneurs Abroad

     Shikaripuri shroffs and Nattukottai Chettiars were Indian bankers who financed export agriculture in Central and Southeast Asia, they had a sophisticated system to transfer money over large distances,

     Indian traders and moneylenders also followed European colonizers into Africa. Hyderabadi Sindhi traders, however, ventured beyond European colonies.

    Indian Trade, Colonialism and the Global System

     Historically, fine cottons produced in India were exported to Europe. In seventeenth century Surat had the largest trade volume which linked India to the world at the end of the seventeenth century..Second position was of Cantoon ( China )

     With industrialial Revolution in England, British cotton manufacture began to expand, and industrialists pressurised the government to restrict cotton imports and protect local industries.

    Result:

     Tariffs were imposed on cloth imports into Britain. Consequently, the inflow of fine Indian cotton began to decline.

     Share of cotton textiles declined from some 30 per cent around 1800 to 15 per cent by 1815.

     Between 1812 and 1871, the share of raw cotton exports rose from 5 per cent to 35 per cent.

    Other exports from India:

     1. Indigo

     2. Opium ( from 1820s it became largest export item to china )

     3. Foodgrains

    Trade surplus

     The value of British exports to India was much higher than the value of British imports from India. Thus Britain had a ‘trade surplus’ with India.

     Britain used this surplus to balance its trade deficits with other countries – that is, with countries from which Britain was importing more than it was selling to.

     Britain’s trade surplus in India also helped pay the so-called ‘home charges’ example pensions

     of British officials in India.

    The Inter-war Economy

     The First World War (1914-18) was mainly fought in Europe. The war began in August 1914.

     Two power blocs:

1.    Allies – Britain, France and Russia (later joined by the US)

2.    Central Powers – Germany, Austria-Hungary and Ottoman Turkey

     This war was the first modern industrial war. It saw the use of machine guns, tanks, aircraft, chemical weapons, etc. on a massive scale.

     The scale of death and destruction was 9 million dead and 20 million injured.

     Most of the killed and maimed were men of working age. These deaths and injuries reduced the

     able-bodied workforce in Europe.

     During the war, industries were restructured to produce war-related goods, as men went to battle,

     women stepped in to undertake jobs that earlier only men were expected to do.

     Britain borrowed large sums of money from US banks as well as the US public. Thus the war

     transformed the US from being an international debtor to an international creditor.

    Post-war Recovery

     Post-war economic recovery proved difficult.

     When Britain was preoccupied with war, industries had developed in India and Japan.

     After the war Britain found it difficult to recapture its earlier position of dominance in the Indian market, and to compete with Japan internationally.

     At the end of the war Britain was burdened with huge external debts.

     The war had led to an economic boom, that is, to a large increase in demand, production and employment. When the war boom ended, production contracted and unemployment increased.

    Agricultural crisis at global level

    Example

     Before the war, eastern Europe was a major supplier of wheat in the world market.

     This supply was disrupted during the war

     Wheat production in Canada, America and Australia expanded dramatically.

     Once the war was over, production in eastern Europe revived.

    Result

     Glut in wheat market

     Grain prices fell, rural incomes declined, and farmers fell deeper into debt.

    Rise of Mass Production and Consumption

     One important feature of the US economy of the 1920s was mass production.

     A well-known pioneer of mass production was the car manufacturer Henry Ford.

     He adapted the assembly line of a Chicago slaughterhouse (in which slaughtered animals were picked apart by butchers as they came down a conveyor belt) to his new car plant in Detroit.

     The assembly line forced workers to repeat a single task mechanically and continuously. Standing in front of a conveyor belt no worker could afford to delay the motions, take a break, or even have a friendly word with a workmate. So workers at the Ford factory quit in large numbers. In desperation

     Ford doubled the daily wage to $5 in January 1914 and banned trade unions from operating in his plants.

     The T Model Ford was the world’s first mass-produced car. Car production in the US rose from 2 million in 1919 to more than 5 million in 1929.

     Fordist industrial practices soon spread in the US.

     Mass production lowered costs and prices of engineered goods. Thanks to higher wages, more workers could now afford to purchase durable consumer goods such as cars. Consumer boom of the 1920s created the basis of prosperity in the US.

    The Great Depression

     The Great Depression began around 1929 and lasted till the mid- 1930s.

     Great Depression catastrophic declines in production, employment, incomes and trade.

     Agricultural regions and communities were the worst affected because the fall in agricultural prices was greater and more prolonged than that in the prices of industrial goods.

    Reasons for depression

     First: agricultural overproduction resulting in fall of prices, as prices slumped and agricultural incomes declined, farmers tried to expand production and bring a larger volume of produce to the market to maintain their overall income. This worsened the glut in the market.

     Second: Countries that depended crucially on US loans now faced an acute crisis. US overseas lenders

     withdrew the loan from countries as they were panicked with the situation. In Europe it led to the failure of some major banks and the collapse of currencies such as the British pound sterling.

     Third: The US attempt to protect its economy in the depression by doubling import duties also dealt

     another severe blow to world trade.

    US and Great depression

     With the fall in prices and the prospect of a depression, US banks had also slashed domestic lending and called back loans.

     Farms could not sell their harvests.

     US citizens could not repay what they had borrowed, and were forced to give up their homes, cars and other consumer durables. The consumerist prosperity of the 1920s now disappeared

      Unemployment soared

     Ultimately, the US banking system itself collapsed. Unable to recover investments, collect loans and repay depositors, thousands of banks went bankrupt and were forced to close. The numbers are phenomenal: by 1933 over 4,000 banks had closed and between 1929 and 1932 about 110, 000 companies had collapsed.

    India and the Great Depression

     In the nineteenth century, colonial India was an exporter of agricultural goods and importer of manufactures.

     India’s exports and imports nearly halved between 1928 and 1934.

     Between 1928 and 1934, wheat prices in India fell by 50 per cent.

     The price of raw jute crashed more than 60 per cent.

     Across India, peasants’ indebtedness increased. They used up their savings, mortgaged lands, and sold whatever jewellery and precious metals they had to meet their expenses.

     Mahatma Gandhi launched the civil disobedience movement at the height of the depression in 1931.

     The depression proved less grim for urban India. Because of falling prices, those with fixed incomes – say town-dwelling landowners who received rents and middle-class salaried employees – now found themselves better off.

    Rebuilding a World Economy: The Post-war Era

     Two groups:

     Axis powers: mainly Nazi Germany, Japan and Italy

     Allies: Britain, France, the Soviet Union and the US.

     At least 60 million people, or about 3 per cent of the world’s 1939 population, are believed to have been killed, directly or indirectly, as a result of the war.

     The war caused an immense amount of economic devastation and social disruption. Reconstruction promised to be long and difficult.

    Two key lessons

     First: an industrial society based on mass production cannot be sustained without mass consumption.

     To ensure mass consumption, there was a need for high and stable incomes. stable incomes can be achieved by full employment.

     Second: The goal of full employment could only be achieved if governments had power to control flows of goods, capital and labour.

    Bretton Woods twins

     The main aim of the post-war international economic system was to preserve economic stability and full employment in the industrial world.

     Its framework was agreed upon at the United Nations Monetary and Financial Conference held in July 1944 at Bretton Woods in New Hampshire, USA.

     The Bretton Woods conference established

     1. International Monetary Fund (IMF)

     2. The International Bank for Reconstruction and Development (popularly known as the World Bank)

     The IMF and the World Bank commenced financial operations in 1947. Decision-making in these institutions is controlled by the Western industrial powers. The US has an effective right of veto over key IMF and World Bank decisions.

     The Bretton Woods system was based on fixed exchange rates. In this system, national currencies, for example the Indian rupee, were pegged to the dollar at a fixed exchange rate. The dollar itself was anchored to gold at a fixed price of $35 per ounce of gold.

    The Early Post-war Years

     The Bretton Woods system inaugurated an era of unprecedented growth of trade and incomes for the Western industrial nations and Japan.

    Decolonisation and Independence

     After  the Second World War in the next two decades most colonies in Asia and Africa emerged as free, independent nations.

     They were, however, overburdened by poverty and a lack of resources.

     The IMF and the World Bank were designed to meet the financial needs of the industrial countries. They were not equipped to cope with the challenge of poverty and lack of development in the former colonies.

     From the late 1950s the Bretton Woods institutions began to shift their attention more towards developing countries.

     Newly independent countries came under the guidance of international agencies such as IMF and World Bank dominated by the former colonial powers.

    Result

     The former colonial powers still controlled vital resources such as minerals and land in many of their former colonies through MNCs very cheaply.

     Therefore they organised themselves as a group – the Group of 77 (or G-77) – to demand a new international economic order (NIEO).

     By the NIEO they meant a system that would give them real control over their natural resources, more development assistance, fairer prices for raw materials, and better access for their manufactured goods in developed countries’ markets.

    End of Bretton Woods and the Beginning of ‘Globalisation’

     From the 1960s the rising costs of its overseas involvements weakened the US’s finances and competitive strength. The US dollar now no longer commanded confidence as the world’s principal currency.

     It could not maintain its value in relation to gold. This eventually led to the collapse of the system of fixed exchange rates and the introduction of a system of floating exchange rates.

     Floating exchange rate depend on supply of currencies in foreign exchange market.

The industrial world was  hit by unemployment that began rising from the mid-1970s and remained high until the early 1990s.

     From the late 1970s MNCs also began to shift production operations to low-wage Asian countries.

     China had been cut off from the post-war world economy since its revolution in 1949. But new economic policies in China and the collapse of the Soviet Union and Soviet-style communism in

     Eastern Europe brought many countries back into the fold of the world economy.

     In the last two decades the world’s economic geography has been transformed as countries such as India, China and Brazil have undergone rapid economic transformation.