Introduction:
Globalisation is Interaction and Interlinking between peoples and Countries in the world. We see globalisation as a recent phenomena but actually it is a long history.
Speaking About Ancient Times:
From ancient times travellers, Traders, Priests and Pilgrims (person who make journey for religious reasons) travelled longer distances for various reasons such as Knowledge, Trade Opportunities, Spiritual Fulfilment and to escape from Cruel Treatment based on race or religion. When they travelled they carried goods, money, skills, ideas, innovations and sometimes Germs & Diseases too.
Early in 3000 BCE Coastal Trade linked Indus Valley Civilization with present day West Asia. Cowries i.e. Cowdi or Seashell got its way from Maldives to China and East Africa.
The Silk Routes Link In the World
Chinese Silk was transported to the western countries mainly with the help of Silk Routes thus the silk routes link connected Trade and Cultures of distant places of the world. Silk routes that were identified on land as well as in sea connected not only the vast regions of Asia but also linked Asia with Europe and Northern Africa. These routes were existing before Christian Era and grown well till fifteenth Century. On the same route Chinese Pottery, Clothes and Spices of India and Southeast Asia also travelled to Europe bringing back precious metals like gold and silver.
The silk route link not only enable the opportunities of trade but also it helped to spread the culture too. Christian Missionaries, Muslim Preachers and Buddhist Missionaries used the same silk route link for Conveying their message to the World.
The Premodern World – 2
Food Travel Spaghetti and Potato
Traders and travellers introduced new crops to the land where they travelled. Noodles travelled to west from China and became Spaghetti. Pasta was travelled to Sicily and island in Italy, all these suggest long distance cultural contacts.
Our ancestors were not know about foods such as potatoes, soya, groundnuts, maize, tomatoes, chillies, sweet potatoes before five centuries.
Christopher Columbus found these foods in America and carried these for production in Asia and Europe.
The introduction of new crops can make or mar life. e.g. Introduction of humble potato led to better life of Europe’s poor, while extensive dependency on potato crop in Ireland caused death of hundreds of thousands when the crop failed due to disease.
Conquest, Disease and Trade
From centuries Indian ocean had known for Busy trade because of movement of goods, people, knowledge, and customers. With this India was a central point of the routes. With the entry of Europeans the routes are grown towards Europe. The discovery of America enhanced the trade as America being rich in crops, minerals and abundant land.
Precious metals majorly silver located in present day Peru and Mexico enhanced Europe’s wealth and financed the trade with Asia.
Portuguese and Spanish win and colonised America. They won because of firepower and the germs of the diseases such as smallpox. Europeans transferred the deadly diseases to Americans. The bodies of Europeans had developed immunity against such diseases but isolated Americans could not be able to do so and hence these get defeated without use of weapon.
Emerging of Europe as Center of world Trade
During nineteenth century there were poverty, hunger and diseases all over in Europe. The religious opposers dissenters i.e. people who do not believe existing beliefs and practices, were harassed. So thousands of the people left Europe and went to America. Here they started growing cotton and sugar with the help of African slaves for the European Markets.
Previously China and India were among the world’s richest countries and were most important of world trade but after China started isolating from the world, gradually Europe was emerged as Center of World Trade.
The Nineteenth Century (1815 – 1914)
Nineteenth century brought significant Economical, Political, Social, Cultural and Technological changes in the world.
Economists suggests three types of ‘flows’ within international economic exchange these are flow of trade i.e. Movement of Goods, flow of capital i.e. Investments over longer distances, and flow of labor i.e. Movement of workers in search of job. All these flows are closely related and causes impacts on people’s lives.
A World Economy Takes Shape:
During nineteenth century people started thinking that Self-sufficiency in food means lower living standards thus they changed their traditional pattern of food production and consumption.
Flow of Trade:
Growth of Population and Industries: Increased Food Consumption and production of Industrial goods led to increased demand for Agricultural Goods. To gain higher profits rich landlords pressurised the government to restrict the imports. so the government made ‘Corn Laws’ Restricting Imports. Against this law, unhappy people counter pressurised the government for abolition of the ‘Corn Laws’ and caused its ending. The prices of imported food grains is much cheaper than that produced within the country. Thus as the land cultivation was no more profitable, people left their lands uncultivated, throwing others out of work. Out of these many went to cities or travelled to other countries.
Increase in Production due to Increased Consumption: Decreased food prices caused increase in Consumption which created pressure on crop producing countries like Eastern Europe, Russia, America and Australia. Thus Lands were Cleared and food production was expanded so as to meet the British Demand for Food.
Flow of Capital: Transport of foodgrains from agricultural lands to ports need Railways, New Harbours need to be built, and old ones need to be expanded with this workers should be provided with homes and settlements all these activities needed money thus capital flowed from London to these places.
Flow of Labor: Shortage of labour in Agricultural Places like in America and Australia led to flow of Labor. Nearly 50 Million Labors were moved from Europe to America and Australia so as to satisfy workers demand. All over the world nearly 150 million left their homes in search of Work and Better Future. This suggests that world agricultural economy had taken shape.
In West Punjab, British Indian Government built network of irrigation canals and transformed semi-deserted lands into fertile agricultural lands and grown wheat and cotton. Worker are brought from other places of Punjab so as to work on these lands.
The Nineteenth Century – 2
Role of Technology
Role of technology is vital in Nineteenth Century. Inventions such as Railways, Steamships and Telegraph were made based on social, political and economic factors. E.g. colonisation resulted in new investments and improvements in transportation facilities i.e. faster railways, lighter vehicles for transport. Because of which food was transported much faster with cheaper rate.
The Trade in Meat:
Till 1870’s to fulfill meat demand animals were shipped live from America to Europe, where they killed for food. Live animals needed large space. They fell ill or die during transport. They lost weight, or became unfit to eat. With the invention of refrigerated ships, it was possible to transport perishable food to long distances. Thus animals were killed in America, Australia, New Zealand and they transported to Europe as frozen meat. This also lowered the meat cost in Europe and also they got other choice of food(other than potatoes and bread).
Late Nineteenth – century Colonialism
During late nineteenth century trade was increased and markets were expanded. But at the darker side colonialism was started. Europeans started winning over countries and causing loss of freedom and livelihood of the people. Colonisation led to severe economic, social and ecological changes to the colonised societies.
Colonial Division of Africa: The colonisers distributed Africa among themselves. In 1985 big European parties met in Berlin and created boundaries on African map.
Britain and France colonised many regions, Belgium and Germany became new colonial powers. In late 1890s US also became colonial power by taking over some colonies which was earlier owned by Spain.
The Nineteenth Century – 3
Europeans Methods to get labor in Africa:
Historically, Africa got abundant land and huge livestock and very small population thus people rarely work for wages.
Europeans were attracted mainly for land and Mineral Resources of Africa but the major problem they faced was people were not ready for working on wages.
To get labour colonial people used many ways such as imposing heavy taxes on peasants, making policies such as only one person of the family was allowed to get inherited land. Due to all of this people started working for wages
Rinderpest or cattle plague
Rinderpest or cattle plague is a viral, deadly disease of cattle. In Africa it was arrived in late 1880s. It was carried by infected cattle that came from British Asia as a food for Italian Soldiers. Italian soldiers were fighting for Eritrea in East Africa. It spread very fast in Africa and killed about 90% of the cattle. This huge loss of cattle led to destruction in African livelihood. Planters, mine owners and colonial government captured remaining cattle resources and made Africans to enter in labour market.
This suggests that control over the scarce cattle resources enabled Europeans to colonise Africa.
Rinderpest In Africa in 1890s, caused severe effects on economy as well as on livelihood of thousands of people.
The Nineteenth Century – 4
Indentured Labour Migration from India
In India, Cottage Industries were declining, land rents were increasing, lands were cleared for mines and Plantations, as a result people were failing to pay the rent and hence debt increased on them. Under such situation, Indian’s were forced to migrate in search of work. Employer’s while hiring them make contracts with them stating that workers had to work for five years before their return journey. Such type of labour were called Indentured Labour.
From India such labour were obtained in Eastern Uttar Pradesh, Bihar, Central India, and dry districts of Tamil Nadu. Employers made them to Work in Plantations, mines,Road and Railway Construction Projects all over the world. Mainly such labour are migrated to Caribbean Islands, Mauritius and Fiji. Tamil Migrants prefer Ceylon and Malaya as these place were closer to home. Sometimes these workers were also hired to work in Tea Plantations in Assam.
Cheats with Labours:
Recruiters are people who hires labour for employer and in turn gain a small commision. These recruiters provide false tempting information such as nature of work, living and working conditions so that labour’s become ready for the work.
Harsh Conditions at Workplace:
When these people arrive at plantations they find very harsh living conditions. Workers had no rights to oppose this. Due to this many people used to run away from the plantations into the jungle those who get caught would be subjected to Severe Punishment.
Cultural Fusions at Workplaces:
Some workers mixed old and new cultural forms and Developed New one like Trinidad’s Muharram march was transformed into ‘Hosay’ which united many people of different races and religions. Rastafarianism i.e. a protest religion also formed because of social and cultural mixing of Indian and Caribbean cultures. Similarly ‘Chutney Music’ was another such popular experience in Trinidad and Guyana.
What After Ending of the Contract:
Most labour continued their work after the closure of contract. Some returned to India and again migrated to new place. Thus even today we observe many people’s such as V. S. Naipaul, Shivnarine Chanderpaul and Ramnaresh Sarwan reflect their names similar to Indian names this is because these are Descendants of Indentured Migrants from India.
End of Indentured Labour:
Indian nationalist leaders started opposing this system since 1900. and finally it was abolished in 1921.
The Nineteenth Century – 5
Indian Entrepreneurs Abroad
For growing Food and other Crops capital was needed. Rich peasants borrow money from bank and markets but humble peasants can’t do so.
Indian Bankers and traders like Shikaripuri Shroffs and Nattukottai Chettiars financed agriculture in Central and Southeast Asia. For that they use their own fund or borrow money from European banks. They have developed Advanced System for transferring money for longer distances too.
Traders like Hyderabadi Sindhi traders expanded their business in Africa. They established large Shops at busy Ports in all over the world and started selling local and imported rare, Valuable Objects. With the increase in Tourists their Business was prospered.
Indian Trade, Colonialism and the Global System.
Indian cotton was exported to Europe. But after industrialisation British cotton manufacturers pressured government to restrict this import so as to protect Local Industries. Thus taxes were imposed on import of cotton.
As a result, export of Indian cloth gradually decreased. In 1800 the share of cotton textiles in the export was 30% which reduced to 15% in 1815 and then to just 3% in 1870s.
It was observed that, as the export of textile goods decreased, at the same time the export of raw materials was increased. The export of raw cotton was increased from just 5% to 35% from year 1812 to 1871. Similarly export of Indigo which was used for dyeing clothes also increased. Export of Opium to China was increased from 1820s. Britain transport Opium to China and from the earned money they imported tea and other products from China.
Trade Surplus:
British manufacturers came to India and started producing and exporting food grain and raw materials to Britain and rest of the world. The earning of Britain by exporting the products to India is much higher than the money required for them to import things from India thus Britain had Trade Surplus’ with India. This extra earning was used by Britain to balance its trade losses with other countries. It was also used to pay ‘home charges’ such as The private remittances home by British Officials i.e. the money transferred to homes of british officials which are working in India. It was also used to pay interests on India’s external debt, and pension to retired officials
The Inter-war Economy – 1
The first world war took place between 1914 to 1918. Even if it was fought in Europe but it caused widespread economic and political instability all over the world.
Importance of War:
Nations Involved: The war was fought between two powerful groups of countries. These are Britain, France and Russia were on one side whereas Germany, Austria-Hungary and Ottoman Turkey were on the opposite side. Later US joined the group of Britain, France and Russia. Thus this war involved world’s leading industrial nations having modern weapons and machinery so as to bring greatest possible destruction to the enemy.
Use of Modern weapons and Machines: The war used modern weapons such as machine guns, tanks, aircrafts, chemical weapons in large quantity. Large ships and trains were used to bring millions of soldiers from all over the world.
Destruction due to the war: In the war more than 9 million died and 20 million injured such a huge destruction was observed first time in the history.
Wartime Transformations
To the Family: Majority of people that took part in the war, were from working age group thus the destruction caused reduction in workforce in the Europe. Since workable people in a family remained very few thus the family income was also affected.
To the Industry: During the war, industries were restructured so as to produce war related products.
To the Society: Earlier only men were seen working outside the homes but due to the war, as men went to battle hence women had to come out of home and start working.
To the Economy: Due to the war, the economic links between these countries were broken. Britain borrowed money from US banks as well as from US public. Now role of US was transformed from international debtor i.e. from taking loans to international creditor i.e. to give loans. Before the war Britain was “world’s leading economy” but at the end of the war it became burdened with huge international debts.
The Inter-War Economy – 2
Post-War Recovery
Conditions During the War
The huge loss of economy was very difficult to recover. Britain was “world’s leading economy” but it became burdened with Huge International Debts at the end of the war. It became difficult for Britain to maintain dominance in Indian Market as well as maintain position in International Market. In India it had to face competition from Developed Industries and Internationally it had to compete with Japan. During the war, demand, Production and Employment during the war were increased but after the war these were decreased.
Reduction in War Expenditure
Government also reduced spendings on war so that they could match the earnings earned at the time of peace negotiations which might help them To Regain their Economic Dominance. Due to which production decreased and led to huge job losses. Thus anxiety and uncertainty about the job was spread all over in Britain.
Increase in Agricultural Output
Agricultural Economies also suffered due to the war. e.g. take the case of wheat producers. Eastern Europe was largest producer and supplier of Wheat in the world market, Before the War. During the war wheat production was disrupted. Against this in Canada, America and Australia Wheat Production was Expanded Dramatically. After the war the production in eastern Europe was increased again. Thus in International market due to presence of wheat in large quantity the prices fell, rural incomes declined, and led to increase in debt on farmers.
The Inter-War Economy – 3
Rise of Mass Production and Consumption
In US, for a short period after the war the US economy was also in trouble but the recovery was quicker. The war already made US as an international Creditor i.e. the loan giver. US also achieved strong economic growth in early 1920s
Rise of Mass Production
One important reason for the growth was Mass Production. Mass production suggests production of Standardised Products in large quantity. Car Manufacturer Henry Ford was known as Pioneer of Mass Production. He adopted ‘Assembly line’ method for mass production. In this method the work is divided into stages. Workers are assigned to each stage those have to perform assigned task and then the product will be moved to the next stage. In this way mass production is possible.
Henry Ford used this method for his new car plant in Detroit and found that it is the fastest and cheapest method of producing vehicles. This method speedup the production by increasing the work output of the workers. e.g. the machine gives a finite time to the worker to enter any part within that time the worker must enter the part. (person entering nut or bolt in machine then machine rotating)
When this method was implemented, workers were initially not able to cope with the speed of the machines so many people left the job. Ford desperately doubled the daily wage to $5 in January 1914 and banned trade unions in his plants.
Due to Increase in Wages Profit was Decreased so he repeatedly increased the speed of production line forcing the workers to work even harder. Ultimately his decision was proved successful he described it as ‘Best Cost-Cutting Decision’ he ever made. This method was spread in US as well as in Europe in the 1920s.
The ‘Assembly line’ method Lowered the Production Cost and prices of produced products and improved the wages of the workers. Car production was increased from 2 million during 1919 to more than 5 million in 1929.
Rise of Consumption:
The consumption was increased by using system of ‘Hire Purchase’ in which the buyer is allowed to pay for purchased product in Weekly or Monthly Installments. Using this system the demand for products such as Refrigerators, Washing Machines, Radios, Gramophone Players etc was increased.
In 1920s large investments in Housing and Consumer Goods increased the Employment and income of people. Thus enabling people to buy more goods.
In 1923 US again became the Capital Exporter and largest overseas lender. US imports and capital export enabled Europe to recover, World Trade Growth and Income growth all over the world.
The Inter-war Economy – 4
The Great Depression
The Great Depression It suggests severe worldwide Economic Depression that began in 1929 and lasted till Mid 1930s. During this period Production, Employment, Income and Trade was affected all over the world. Almost all parts of the country such as Agriculture, Businesses, Banks were Collapsed. In general agriculture and Communities were badly affected as the fall in prices of Agricultural Goods was greater than the prices of Industrial Goods.
Agricultural Overproduction:
Agricultural overproduction led to decreased agricultural prices and thus reducing the incomes of the farmers. To maintain the income farmers tried to produce much More Production which pushed down the prices much further leading to worsened condition, at this time there were no buyers for the agricultural products so peasants could not even sell their goods.
Withdrawal of US Loans:
In Mid 1920s countries took loans from US so as to finance their production activities. Due to the depression, the US Overseas Lenders were worried about the depression and thus they started taking back their money. Within just one year the loan of US on overseas countries was reduced from $1billion to just quarter of that within just one year. The countries that were crucially dependent on US for raising their funds now came under big trouble of getting no fund. withdrawal of US loans also caused various other problems too such as it led to failure of some major banks and decrease in Value of Currency. In order to protect the country’s economy, America doubled its import duties and thus severely affected the trade all over the world.
Effects of Depression Within the US:
Collapse of Whole Banking System: US was also the country that was severely affected by the depression. The whole banking system was collapsed as banks were not able to recover investments, Collect Loans and to Repay the Depositors thus US banks stopped giving domestic loans Called Back Loans those which are not able to withstand the losses were closed. In US, by 1933 about 4000 Banks were Closed.
Problems to Households, Farmers and Businesses: Farmers were not able to sell their produce. Between 1929 to 1932 about 110000 Businesses were closed. Now Households came under serious problem of Decreased Income. Due to decreased income households were unable to repay the loan and thus they were forced to give up their homes, cars and other consumer durables. As unemployment spread, people started moving away from native place in search of jobs.
The Inter-war Economy – 5
India and the Great Depression
The effects of the Great depression were also felt in India. During nineteenth century India became exporter of agricultural goods and importer of manufactured goods. Due to depression India’s exports and imports were nearly halved from 1928 to 1934. As the prices decreased internationally these also decreased in India too. During 1928 to 1934 wheat prices in India were fell by 50 per cent.
How People Suffered:
Different social groups suffered differently. Peasants and farmers living in rural areas suffered more than people living in urban areas. Due to falling prices and refusal of colonial government to reduce the revenue demands the life of peasants and farmers was under a great problem.
Effect of Great Depression to Peasants:
In Bengal, peasants were producing jute which was processed in factories to form gunny bags. But as industries collapsed and gunny export decreased prices of jute fell much more. Ultimately peasants fell deeper in the debt. To repay the debt peasants started giving up their savings, owned lands, jewellery and precious metals.
According to John Maynard Keynes, it was the Indian gold that helped speed up Britain’s recovery. Indian gold helped Britain but did nothing for Indian peasants.
Effect of Great Depression to Urban People
The depression did not affected the urban people much. Sometime it was beneficial for them. People with fixed incomes were now able to get the products with much lower prices. Government extended tariff protection to industries within the country due to pressure of national movement.
Rebuilding a World Economy: The Post-War Era -1
Introduction:
Within just two decades after the end of first world war, Second world war started. The war was fought between Axis Powers i.e. Nazi Germany, Japan and Italy and the Allies i.e. Britain, France, Soviet Union and US. The war Lasts for 6 years and was fought in many places including land, sea and air. More than 60 Million people died and Millions were injured the dead and injured people included civilians too. Large parts of Asia and Europe were destroyed and several cities were also disrupted by Aerial Bombardment and large Calibre Guns.
Two major effects of the war include becoming of US as dominant in economic, political and military power in the Western World. And emerging of Soviet Union from a backward agricultural country to a world power during the situation of Great Depression.
Post War Settlement
Post-war International Economic System was aimed to Preserve Economic Stability and full employment in the Industrial World, because Economists and Politicians learned two lessons from inter-war economic experiences these were Need of Mass Consumption and Need of Full Employment
Need of Mass Consumption: Economy based on Mass Production would sustain if there will be mass consumption, but for that the incomes should be full and steady. Since market conditions would never be stable so government must take Measures to minimise the fluctuations in prices, Production and employment so as to Ensure Economic Stability.
Need of Full Employment: the goal of full employment would only be possible if and only if government could control Flows of Goods, Flows of capital and Flows of labour.
Bretton Woods Institutions:
The IMF i.e. International Monetary Fund and World Bank are Bretton Woods Institutions.
The framework of these institutions was accepted at ‘United Nations Monetary and Financial Conference’ in July 1944 at Bretton Woods in New Hampshire, USA. The conference also established International Monetary Fund (IMF) so as to facilitate financial operations of the member countries. The International Bank for Reconstruction and Development which is popularly known as World Bank was set up so as to finance reconstruction after the war. These institutions were referred to as Bretton Woods Institutions or Bretton Woods twins.
The IMF and World Bank formally begin their financial operations in 1947. Decision-Making in these institutions were primarily controlled by Western Industrial Powers. The US has right to reject key IMF and World Bank Decisions.
This system was based on Fixed Exchange Rates. The price of dollar was fixed to gold. nearly one ounce of gold costs $35. Similarly Indian Rupee was related to dollar with fixed exchange ratio.
Rebuilding a world economy: The Post-war Era -2
The Early Post-war Years
The Bretton Woods system brought excellent growth of trade and incomes to the Western industrial nations and Japan.
From 1950 to 1970, The world trade was experienced stable growth of 8% per year, incomes increased by 5% per year and unemployment rate at an average was limited to just 5% per year.
Technological improvements were seen worldwide. Developing countries started growing at faster rate in order to catch up with developed countries. For that they started investing large amount of capital for importing industrial plants and equipments so as to use modern technology.
Decolonisation and Independence
After the second world war most countries of Asia and Africa achieved their independence. But these countries were overburdened by poverty and lack of resources. Their economies were severely affected due to long time colonial rule.
Initially IMF and World Bank were established to facilitate financial operations of the Industrial countries. These were not concerned about the developing countries. But as European countries and Japan rapidly rebuilt their economies and became less dependent on these institutions thus these institutions shifted their attention towards developing countries.
The newly independent countries were under pressure of lifting up their economic conditions and bringing people out of poverty. But the problem was the colonial power were not ready to leave control from land and resources of the colonies. Countries like US often manage to get resources with very cheaper prices. Western countries were growing but the developing countries were not benefiting from their growth.
NIEO: So, 77 developing countries organised themselves as a group known as Group of 77 or G-77 and demanded New International Economic Order (NIEO). With this system they place their needs such as giving real control over countries resources, more development assistance, fairer prices for raw materials, and better access to their produce in developed countries’ market.
Rebuilding a world economy: The Post-war Era -3
The End of Bretton Woods and the Beginning of ‘Globalisation’
Introduction of Floating Exchange Rates: US’s economy and competitive strength was weakened because of rising costs of overseas activities. Now dollar was no longer remained as principal currency in the world. Dollar was not able to maintain its value in terms of gold. thus the Fixed exchange rates were collapsed and Floating exchange rates were introduced.
Changing of International Financial System: Earlier, developing countries obtain loan and get developmental assistance from International Institutions. During mid 1970s this trend shifted to forcing the developing countries to take loan from Western Commercial Banks and private Lending Institutions. As a result developing world was facing Periodic Debts which led to decrease in incomes and increase in poverty. The condition was worse in Africa and Latin America.
Unemployment in Industrial World: From mid 1970s to early 1990s the industrial world faced the problem of Unemployment. Now the Multinational companies (MNC’s) started shifting to developing countries.
Low Wage structure in China: Initially China remained independent from the world economy but due to new economic Policies in China and collapse of Soviet-style communism made it to join with world economy. China was popularly known for cheap labor thus MNCs started investing in China.
Rapid Economic Transformation: Relocation of industries in low-wage countries helped the world trade and capital flows to improve. Countries such as India, China, Brazil undergone rapid economic transformations which led to transformation of world economy.