The Making of the Global World
1.0 The Pre-Modern World
Globalisation, as an economic system, has a long history, not just the last 50 years.
This history includes trade, migration, people seeking work, and the movement of capital.
From ancient times, travellers, traders, priests, and pilgrims journeyed vast distances for:-
A ) Knowledge
B ) Opportunity
C ) Spiritual fulfilment
As early as 3000 BCE, coastal trade connected the Indus Valley civilisations with present-day West Asia.
1.1 Silk Routes Link the World
Silk Routes exemplify vibrant pre-modern trade and cultural links across distant parts of the world.
Historians have identified several Silk Routes, both overland and sea, connecting vast regions of Asia with Europe and northern Africa.
Trade involved:-
A ) Textiles and spices flowing from India.
B ) Precious metals (gold and silver) flowing from Europe to Asia.
1.2 Food Travels: Spaghetti and Potato
Food provides numerous examples of long-distance cultural exchange.
New crops were introduced by traders and travellers.
Examples of food travel:
A ) Noodles travelled west from China to become spaghetti.
B ) Common foods like potatoes, soya, groundnuts, maize, tomatoes, chillies, and sweet potatoes were unknown in Europe about five centuries ago.
C ) Many common foods originated from America's indigenous inhabitants (American Indians).
1.3 conquest, Disease and Trade
For centuries, the Indian Ocean was a hub of bustling trade, with goods, people, knowledge, and customs crisscrossing its waters.
The arrival of Europeans redirected these trade flows towards Europe.
America's vast lands, abundant crops, and minerals began to transform trade and life globally.
The Portuguese and Spanish conquest and colonisation of America were well underway by the mid-sixteenth century.
Europeans' most potent weapon was not military, but germs like smallpox, which proved deadly to native populations.
Until the nineteenth century, poverty and hunger were widespread in Europe.
Until well into the eighteenth century, China and India were among the world's wealthiest countries.
From the fifteenth century, China reportedly restricted overseas contacts and became isolated.
Europe subsequently emerged as the centre of world trade.
2.0 The Nineteenth Century (1815-1914)
During this period, economic, political, social, cultural, and technological factors interacted complexly to transform societies and reshape international relations.
Economists identified three key flows or movements:
Flow of trade: Primarily referred to trade in goods (e.g., cloth or wheat).
Flow of labour: The migration of people seeking employment.
Movement of capital: For short-term or long-term investments over long distances.
A World Economy Takes Shape
* In nineteenth-century Britain, population growth from the late eighteenth century led to:
* Self-sufficiency in food meaning lower living standards.
* Social conflict.
* Corn Laws (restrictions on corn import) were imposed.
* British agriculture struggled to compete with imports, leading to vast areas of land being uncultivated.
* Thousands of men and women migrated to cities or overseas.
* In Britain, food prices fell, and by the mid-nineteenth century, industrial growth led to higher incomes and increased food imports.
* To meet British demand, lands were cleared in Eastern Europe, Russia, America, and Australia to expand food production.
* Linking railways to agricultural fields and building homes required significant capital and labour.
* London provided finance, while people emigrated from Europe to America and Australia for labour in the nineteenth century.
* By 1890, a global agricultural economy had formed, adapting to complex changes in labour movement, capital flows, ecologies, and technology.
* In West Punjab, the British Indian government built irrigation canals to convert semi-desert areas into fertile agricultural lands for wheat and cotton export.
* Cotton cultivation expanded worldwide to supply British textile mills.
Role of Technology
* Key technological inventions that transformed the nineteenth-century world included:
* Railways
* Steamships
* Telegraph
* Technological advances were often driven by larger social, political, and economic factors.
* Example: Colonisation stimulated new investments and improvements in transport:
* Faster railways
* Lighter wagons
* Larger ships
* These innovations helped move food more cheaply and quickly from distant farms to markets.
* Live animals were shipped from America to Europe until the 1870s.
* Meat, once a luxury for the European poor, became more accessible, allowing many to add it (along with butter and eggs) to their diet, breaking the monotony of bread and potatoes.
Late Nineteenth-Century Colonialism
* Trade flourished and markets expanded in the late nineteenth century.
* However, this expansion also led to a loss of freedoms and livelihoods in many parts of the world.
* In 1885, European powers met in Berlin to divide Africa among themselves.
* Britain and France significantly expanded their overseas territories.
* Belgium and Germany emerged as new colonial powers.
* The US also became a colonial power in the late 1890s by acquiring former Spanish colonies.
Rinderpest, or the Cattle Plague
* In the 1890s, a fast-spreading cattle plague (Rinderpest) severely impacted livelihoods and local economies in Africa.
* Africa had abundant land but a relatively small population.
* Europeans were drawn to Africa in the late nineteenth century by its vast land and mineral resources.
* Europeans aimed to establish plantations and mines to produce crops and minerals for export to Europe.
* A key problem was a shortage of labour willing to work for wages.
* Inheritance laws were altered, allowing only one family member to inherit land.
* Rinderpest arrived in Africa in the late 1880s, carried by infected cattle imported from British Asia to feed Italian soldiers invading Eritrea in East Africa.
* The widespread loss of cattle devastated African livelihoods.
Indentured Labour Migration from India
* Indentured labour illustrates the dual nature of the nineteenth-century world:
* Faster economic growth alongside great misery.
* Higher incomes for some, poverty for others.
* Technological advances in some areas, new forms of coercion in others.
* In India, indentured labourers were hired under contracts.
* Most came from present-day eastern Uttar Pradesh, Bihar, central India, and the dry districts of Tamil Nadu.
* Main destinations for Indian indentured migrants included:
* Caribbean islands (Trinidad, Guyana, Surinam)
* Mauritius
* Fiji
* Workers were also recruited for tea plantations in Assam.
* Nineteenth-century indenture was often described as a "new system of slavery."
Cultural impacts:
* In Trinidad, the annual Muharram procession transformed into a carnival called 'Hosay,' involving workers of all races and religions.
* The protest religion of Rastafarianism is also believed to reflect social and cultural links with Indian migrants to the Caribbean.
* From the 1900s, India's nationalist leaders began opposing the indentured labour system due to its abusive and cruel nature.
* The system was abolished in 1921.
Indian Entrepreneurs Abroad
* Growing food and other crops for the world market required significant capital.
* Indian bankers and traders, such as Shikaripuri shroffs and Nattukottai Chettiars, financed export agriculture in Central and Southeast Asia.
* They used their own funds or borrowed from European banks.
Indian Trade, Colonialism and the Global System
* Cotton from India was exported to Europe.
* Britain imposed tariffs on cloth imports, leading to a decline in the inflow of fine Indian cotton.
* Over the nineteenth century, British manufacturers flooded the Indian market.
* India played a crucial role in the late-nineteenth-century world economy by helping Britain balance its deficits.
* Britain's trade surplus in India also helped pay "home charges," which included:
* Private remittances home by British officials and traders.
* Interest payments on India's external debt.
* Pensions of British officials in India.
The Inter-War Economy
* The First World War (1914-18), fought in Europe, had a global impact.
* This period saw widespread economic and political instability, followed by another catastrophic war.
Wartime Transformations
* The First World War was fought between:
* Allies: Britain, France, and Russia (later joined by the US).
* Central Powers: Germany, Austria-Hungary, and Ottoman Turkey.
* The war lasted over four years and involved leading industrial nations.
* It was the first modern industrial war, characterized by the massive use of:
* Machine guns
* Tanks
* Aircraft
* Chemical weapons
* Industries were restructured to produce war-related goods.
* Britain borrowed heavily from US banks and the US public, transforming the US from an international debtor to an international creditor.
Post-War Recovery
* After the war, Britain, once the world's leading economy, faced a prolonged crisis.
* Industries had developed in India and Japan while Britain was preoccupied with the war.
* Britain struggled to regain its dominance in the Indian market and compete with Japan internationally.
* The war left Britain burdened with huge external debts.
* Anxiety and uncertainty about work became a persistent feature of the post-war scenario.
Rise of Mass Production and Consumption
* The US economy recovered quickly and resumed strong growth in the early 1920s.
* Mass production became a significant feature of the US economy, beginning in the late nineteenth century.
* Henry Ford, a car manufacturer, was a pioneer of mass production, establishing his plant in Detroit.
* The T-Model Ford was the world's first mass-produced car.
* Fordist industrial practices rapidly spread in the US and were adopted in Europe in the 1920s.
* Demand for consumer goods like refrigerators and washing machines boomed, financed by loans.
* In 1923, the US resumed exporting capital globally, becoming the largest overseas lender.
The Great Depression
* The Great Depression began around 1929 and lasted until the mid-1930s.
* Most parts of the world experienced catastrophic declines in:
* Production
* Employment
* Incomes
* Trade
* Agricultural regions and communities were most severely affected.
* Several factors contributed to the depression:
* Agricultural overproduction.
* Many countries financed investments through US loans in the mid-1920s.
* The withdrawal of US loans affected the rest of the world in various ways.
* The US was also severely impacted, with its banking system collapsing as thousands of banks went bankrupt and closed.
India and the Great Depression
* Indian trade was immediately affected by the depression.
* Agricultural prices fell sharply, but the colonial government refused to reduce revenue demands.
* During these depression years, India became an exporter of precious metals, particularly gold.
* Rural India was rife with unrest when Mahatma Gandhi launched the Civil Disobedience Movement in 1931, at the height of the depression.
Rebuilding a World Economy: The Post-War Era
* Two decades after WWI, the Second World War broke out.
* It was fought between:
* Axis powers: Mainly Nazi Germany, Japan, and Italy.
* Allies: Britain, France, the Soviet Union, and the US.
* The war lasted six years, fought on land, sea, and in the air.
* It caused immense economic devastation and social disruption.
* Post-war reconstruction was shaped by two crucial influences:
* The US emerged as the dominant economic, political, and military power in the Western world.
* The dominance of the Soviet Union.
Post-War Settlement and the Bretton Woods Institutions
* Two key lessons were learned from the inter-war economic experience:
* Mass production cannot be sustained without mass consumption.
* A country's economic links with the outside world are crucial.
* The Bretton Woods conference established:
* The International Monetary Fund (IMF): To manage external surpluses and deficits of member nations.
* The International Bank for Reconstruction and Development (World Bank): To finance post-war reconstruction.
* The IMF and World Bank began financial operations in 1947.
The Early Post-War Years
* The Bretton Woods system ushered in an era of unprecedented growth in trade and income for Western industrial nations and Japan.
* During this decade, technology and enterprise spread globally.
Decolonisation and Independence
* After WWII, large parts of the world remained under European colonial rule.
* The IMF and World Bank were initially designed to meet the financial needs of industrial countries.
* From the late 1950s, the IMF and World Bank shifted their attention more towards developing countries.
* Most developing countries did not benefit from the rapid growth experienced by Western economies in the 1950s and 1960s.
* They organized as a group – the Group of 77 (G-77) – and demanded a New International Economic Order (NIEO).
* NIEO aimed for a system that would give developing countries:
* Real control over their natural resources.
* More development assistance.
* Fairer prices for raw materials.
* Better access for their manufactured goods in developed countries' markets.
End of Bretton Woods and the Beginning of ‘Globalisation’
* From the 1960s, the US's financial and competitive strength weakened due to rising costs of its overseas involvement.
* In the mid-1970s, the international financial system changed, and the industrial world faced unemployment.
* Multinational Corporations (MNCs) began shifting production to low-wage Asian countries.
* China became an attractive destination for foreign MNC investment.
* In the last two decades, the world's economic geography has been transformed by the rapid economic transformation of countries like India, China, and Brazil.
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