The Making of a Global World
1. Globalisation
Globalisation refers to an economic system of trade, migration of people in search of
work, the movement of capital,
and much else. (visible
signs of global interconnectedness in our lives today is called Globalisation)
Earliest evidence for Globalisation
1.
As early as 3000 BCE an active coastal trade linked the Indus valley civilisations with present-day West Asia.
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.
Silk Routes Link the World
1. The silk routes are a good example of vibrant
pre-modern trade and cultural
links between distant parts of the world.
2. The name silk routes points to the importance of West-bound Chinese silk cargoes along this route.
3. Historians
have identified several
silk routes, over
land and by sea, knitting together vast regions of Asia, and linking Asia with Europe and northern Africa. .
4. But Chinese pottery also travelled the same route,
as did textiles and spices from India and Southeast Asia.
5. In return, precious metals gold and silver flowed
from Europe to Asia.
Trade and cultural exchange
always went hand in hand.
Food Travels: Spaghetti
and Potato
1. Traders and travellers introduced new crops
to the lands they travelled. Even ready foodstuff in distant parts of the world might share common origins.
2. Take spaghetti and noodles. It is believed that noodles travelled west from China to
become spaghetti. Or, perhaps
Arab traders took pasta to fifth-century Sicily,
an island now in Italy.
3. Similar foods were also known
in India and Japan, so the truth about their origins
may never be known.
4. 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.
5. 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.
6. Europe`s poor began to eat better and live longer with the introduction of the humble potato. Ireland`s
poorest peasants became so dependent on potatoes that when disease destroyed the potato crop in the mid-1840s, hundreds
of thousands died of
starvation
Conquest, Disease and Trade
1. The pre-modern world shrank greatly in the sixteenth century after European sailors found a sea route to Asia
and also successfully crossed the
western ocean to America.
2. Indian Ocean was known for bustling trade,
with goods, people, knowledge, customs, etc. criss-crossing
its waters.. The entry of the Europeans helped expand or redirect some of these flows towards Europe.
3. Before its discovery America had been cut off from regular contact with the rest of the world for millions of years. But from 16th century, its vast lands and abundant crops and minerals
began to transform trade and lives everywhere.
4. Precious metals, particularly silver, from mines located in present- day Peru and Mexico also enhanced Europe`s wealth and financed its trade with Asia. Many expeditions set off
in search of El Dorado, the fabled city of gold.
5. The Portuguese and Spanish conquest and colonisation of America was decisively under way by the mid-16th
century. They carried smallpox on their person. Because of their long isolation, America`s original inhabitants had no immunity against these diseases that came from Europe.
6. Smallpox in particular proved a deadly killer. Once introduced, it spread
deep into the continent, ahead even of any Europeans
reaching there. It killed and decimated whole communities, paving
the way for conquest.
7. Guns could be bought
or captured and turned against
the invaders. But not diseases such as smallpox to which the conquerors were mostly
immune.
8. 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.
9. Thousands therefore fled Europe for America.
Here, by the eighteenth century,
plantations worked by slaves captured in Africa were growing cotton and sugar for European markets.
10.
Till
18th century, China and India
were among the world`s richest countries. They were also pre-eminent in Asian trade. However, China had restricted overseas contacts and retreated into
isolation.. So Europe now emerged as the centre of world trade.
Economists identify three types of movement or flows within international economic exchanges
in 19th century.
1. The first is the flow of trade which in the nineteenth century referred largely to
trade in goods (e.g., cloth or
wheat).
2. The second is the flow of labour the migration
of people in search of employment.
3.
The
third is the movement of capital for short-term or long-term investments over long distances.
All three flows were closely interwoven and affected peoples lives more deeply
now than ever before. The interconnections could
sometimes be broken for example, labour
migration was often more restricted than goods or capital flows.
World Economy
Takes Shape
Traditionally, countries liked to be self-sufficient in food. But in
nineteenth-century Britain, self-sufficiency in food meant lower living standards and social conflict. Why was this so?
1. Population growth from the late eighteenth
century had increased the demand
for food grains in Britain.
2. As urban centres
expanded and industry grew, the demand for
agricultural products went up,
pushing up food grain prices.
3. 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.
4. Unhappy with high food prices, industrialists
and urban dwellers forced
the abolition of the Corn Laws.
After the Corn Laws were scrapped, food could be imported into Britain more cheaply than it could be
produced within the country.
5. British agriculture was unable to compete with imports. 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.
As food prices fell, consumption in Britain rose. From the
mid- nineteenth century, faster industrial growth in Britain also led to higher incomes, and therefore more food imports.
1. Around the world in Eastern
Europe, Russia, America and Australia lands were cleared and food production expanded
to meet the British demand.
2. It was not enough merely to clear lands for
agriculture. Railways were needed to link the agricultural regions
to the ports.
3. New harbours had to be built and old ones expanded
to ship the new cargoes. People had to settle
on the lands to bring them under
cultivation. This meant building homes and
settlements.
4. All these activities
in turn required capital and labour. Capital flowed from financial centres such as London.
The demand for labour in places where labour was in short supply as in America and Australia
led to more migration.
5. Nearly 50 million people emigrated from
Europe to America and Australia in the nineteenth century. All over the world some 150 million are estimated
to have left their homes,
crossed oceans and vast distances over land in search of a better future.
Global agricultural economy
1. By 1890, a global agricultural economy had taken
shape, accompanied by complex changes in labour
movement patterns, capital flows,
ecologies and technology.
2. Food no longer came from a nearby village or town, but from
thousands of miles away. It was grown
by an agricultural worker, perhaps
recently arrived on a large
farm that was converted
from forest.
3. It was transported by railway,
built for that very purpose,
and by ships which were increasingly manned in these
decades by low-paid workers from
southern Europe, Asia, Africa
and the Caribbean.
4. Some of this dramatic change occurred in west Punjab. Here the British Indian government built a network
of irrigation canals to transform
semi-desert wastes into fertile agricultural lands that
could grow wheat and cotton for export. The Canal Colonies, as the areas irrigated by the new canals were called, were settled
by peasants from other parts
of Punjab.
5. Cultivation
of cotton expanded worldwide to feed British
textile mills. Between 1820 and 1914 world trade is estimated to have multiplied 25 to 40 times. Nearly 60 per cent of this trade comprised primary products that is, agricultural
products such as wheat and cotton, and minerals
such as coal.
What was the role of technology in Global agricultural economy ?
1. The railways, steamships, the telegraph were important inventions
without which we cannot imagine the transformed nineteenth-century world. But technological advances were often the
result of larger social, political
and economic factors.
2. 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.
3. The trade in meat offers a good example of this connected process. Till
the 1870s, animals were shipped live from America to Europe and then slaughtered when they arrived
there. But live animals took
up a lot of ship space. Many also died in voyage,
fell ill, lost weight, or became unfit to eat.
4. Meat was hence
an expensive luxury
beyond the reach of the European poor. High prices
in turn kept demand and production
down until the development of a new technology, namely, refrigerated ships, which enabled the transport of perishable foods over long distances.
5. Now animals were slaughtered for food at the
starting point in America, Australia or New Zealand and then transported to Europe as frozen meat. This reduced shipping costs and
lowered meat prices in Europe. The poor in Europe could now consume a more varied diet.
6. To the earlier monotony of bread and potatoes many could now add meat (and butter and eggs) to their diet. Better living conditions
promoted social peace within the country and support for imperialism abroad.
Late 19th
century Colonialism
1. Trade flourished and markets expanded in the
late nineteenth century. But this was not only a period of expanding trade and increased prosperity. It is important to
realize that there was a darker side to this process.
2. In many parts of the world, the expansion of trade and a closer relationship with the world economy also meant a loss of freedoms and
livelihoods.
3. Late- nineteenth-century European conquests
produced many painful economic, social and ecological changes
through which the colonised societies
were brought into the world economy
4. In Africa some countries` borders
run straight,
as if they were drawn using a ruler. 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.
5. Britain and France made vast additions to their overseas territories in the late 19th
century. 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.
Let us look at one example of the destructive impact of colonialism on the economy and livelihoods of colonised people.
Rinderpest, or the Cattle
Plague
1.
In Africa, in the 1890s, a fast-spreading disease of cattle plague or rinderpest had a terrifying impact
on people`s livelihoods and the
local economy.
2.
This is
a good example of the widespread European imperial impact on colonised societies. It shows how in this era of conquest even a disease
affecting cattle reshaped
the lives and fortunes of thousands of people ..
3.
For centuries, land and livestock sustained African livelihoods and people rarely worked for a
wage. If an African possessing land and livestock
and there was no
need to work for a wage.
4.
Europeans came to Africa
hoping to establish plantations and mines to produce
crops and minerals for export to Europe. But there was an unexpected problem- a shortage
of labour and no body was willing to work for wages.
5.
Employers used many methods
to recruit and retain labour.
Heavy taxes were imposed
which could be paid only by working for wages on plantations and mines.
6.
Inheritance laws were changed so that peasants were displaced from land: only one member of a family was allowed to inherit land, as a result
of which the others were pushed into
the labour market. Mineworkers were also confined in compounds and not allowed
to move about freely.
Then came rinderpest, a devastating cattle disease.
1.
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.
2.
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.
3.
The loss of cattle destroyed African livelihoods. Planters, mine owners and colonial governments now successfully monopolised what scarce cattle resources remained, to strengthen
their power and to force Africans
into the labour market.
4.
Control
over the scarce resource of cattle enabled
European colonisers to conquer and subdue Africa.
5.
Similar stories can be told about the impact of Western conquest on other parts
of the nineteenth-century world.
Indentured Labour Migration
from India
1.
The indentured
labour migration from India also illustrates the two-sided nature of the nineteenth-century world.
It was a world of faster economic growth as
well as great misery, higher incomes for some and poverty for
others, technological advances in some areas and new forms of coercion
in others.
2.
In the nineteenth century, hundreds of thousands of Indian and Chinese
labourers went to work on plantations, mines and in road and railway construction projects around the world.
3.
In
India, indentured labourers were
hired under contracts which promised return travel to India after they had worked
five years in plantation.
4.
Most Indian indentured workers came from the present-day regions of eastern
Uttar Pradesh, Bihar, central India and the dry districts of Tamil Nadu.
5.
In
the mid-nineteenth century these regions experienced
many changes like cottage
industries declined, land rents rose, lands were cleared for mines and plantations. All this affected
the lives of the poor: they failed to pay their rents, became deeply indebted
and were forced to migrate in search of work. ( why were Indians forced to become indentured
migrants?)
6.
The
main destinations of Indian indentured migrants
were the Caribbean islands (mainly Trinidad, Guyana and Surinam), Mauritius and Fiji. Closer home, Tamil migrants
went to Ceylon
and Malaya. Indentured
workers were also recruited for tea plantations in Assam.
7.
Recruitment
was done by agents engaged by employers
and paid a small commission. Many migrants
agreed to take up work hoping to escape poverty or oppression in their home villages. Agents also tempted the prospective migrants by providing false information about final destinations, modes of travel, the nature of the work, and living and working conditions. Often migrants were not even told that they were to embark
on a long sea
voyage. Sometimes agents even forcibly
abducted less willing migrants.
8.
Nineteenth-century
indenture has been described as a new system
of slavery.
a. 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.
b. But workers discovered their own ways of surviving.
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.
c. In 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.
d. Similarly, 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.
e. 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.
f.
Most
indentured workers stayed on after their contracts ended, or returned to their new homes after a short spell in India. Consequently, there are large communities of people of
Indian descent in these countries.
Have you heard
of the Nobel Prize-winning writer V.S. Naipaul, West Indies cricketers Shivnarine Chanderpaul
and Ramnaresh Sarwan
From the 1900s India`s nationalist leaders began opposing the system of indentured labour migration as abusive and cruel. It was abolished in 1921.
Yet for a number of decades afterwards,
descendants of Indian indentured workers, often thought of
as coolies, remained an uneasy minority in the Caribbean islands.
Some of Naipaul`s early novels capture their sense of loss and alienation.
Indian
Entrepreneurs Abroad
1. Growing food and other crops for the world market required
capital. Large plantations could borrow it from banks and markets.
2. Shikaripuri
shroffs and Nattukottai Chettiars.
They were amongst the many groups of bankers
and traders who financed export agriculture in Central and Southeast Asia,
using either their own funds or those borrowed from European banks.
3. They had a sophisticated system
to transfer money over large distances, and even developed indigenous forms
of corporate organisation.
4. Indian traders and moneylenders also followed European colonisers into Africa. Hyderabadi Sindhi traders, ventured beyond European colonies.
5. From the 1860s they established flourishing emporia at busy ports worldwide, selling
local and imported curios to
tourists whose numbers were beginning to swell, thanks to the development of safe and comfortable passenger vessels.
Indian Trade,
Colonialism and the Global System
1. Historically, fine cottons produced in India were exported to Europe. With industrialisation, British cotton manufactures began to expand, and industrialists pressurised the government
to restrict cotton imports from India.
2. Tariffs were imposed on Indian cloths . Consequently, the inflow of fine Indian cotton began to decline.
3. From 19th century, British manufacturers also began to seek overseas markets for their cloth. Indian textiles
now faced stiff
competition in other
international markets.
4. If we look at the figures of exports from India, Cotton
textile export was 30 per cent in 1800 to 3
percent in 1870s
5.
But export
of raw materials increased equally
fast. In 1812 it
was 5 percent and in 1871 it became 35 per cent.
6.
opium shipments to China
grew rapidly from the 1820s to become for a while India`s single largest export. Britain grew opium in India and exported it to China
and, with the money earned
through this sale,
it financed its tea and other imports
from China.
7.
But 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.
8.
By helping Britain balance its deficits,
India played a crucial role in the late-nineteenth-century world economy.
( How did India play a crucial role in the late-nineteenth-century world economy?
9.
Britains trade surplus in India also helped pay the so-called `home charges` that included private remittances home by British officials and traders, interest payments on India`s external debt, and pensions of British officials in India.
The Inter-war
Economy
The First World War
was a war like no other before-Why?
1.
When the war began in August 1914, many governments thought
it would be over by Christmas. It lasted more than four years.
2.
The
First World War was a war like no other before. The fighting involved the worlds leading industrial nations
3.
This war was thus the first modern industrial
war. It saw the use of machine guns, tanks, aircraft, chemical
weapons, etc. on a massive scale.
4.
The scale of death and destruction 9 million dead and 20 million injured was unthinkable before the industrial age, without the use of industrial arms.
5.
Most of
the killed and maimed were men of working age. These deaths and injuries reduced the able-bodied men.
Post-war economic recovery proved difficult in Britain –Why?
1. After the war Britain found it difficult to recapture its earlier position
of dominance in the Indian market, and to compete with
Japan internationally.
2. The war had led to an economic boom, that is, to a large increase
in demand, production and employment.
3. When the war boom ended,
production contracted and unemployment
increased.
4. In 1921 one in every five British workers was out of work. Indeed, anxiety and uncertainty about work became an enduring
part of the post-war scenario.
5. Before the war, eastern Europe was a major supplier of wheat in the world market. When
this supply was disrupted
during the war, wheat production in Canada, America and Australia expanded
dramatically.
6. But once the war was over,
production in eastern Europe revived and created a glut in wheat output. Grain prices fell, rural incomes
declined, and farmers fell deeper into debt.
Post-war economic recovery was quicker in USA–Why?
1. One important feature of the US economy of
the 1920s was mass production.
2. . A well-known pioneer of mass production was
the car manufacturer Henry Ford. He adapted
the assembly line of
a Chicago slaughter house to his new car plant in Detroit.
3. He realised that the
assembly line method would allow a faster and cheaper way of producing vehicles. The assembly line forced workers to repeat a single task mechanically and continuously such as fitting a particular part to the car at a pace dictated by the
conveyor belt.
4. 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.
5. As a result, HENRY FORD`s cars came off the assembly line at three-minute intervals, a speed much faster than that achieved
by previous methods.
The T- Model Ford was the world`s first mass-produced car.
Problems
1. At first workers at the Ford factory were unable to cope with the stress
of working on assembly lines in which
they could not control the pace of work.
2. So they quit in large
numbers. In desperation Ford
doubled the daily wage to $5 in January 1914.
3. At the same
time he banned
trade unions from operating in his plants.
4. Henry Ford recovered the high wage by
repeatedly speeding up the production line and forcing workers to work ever harder.
5. Fordist industrial practices soon spread in
the US. They were also widely
copied in Europe in the 1920s.
Impacts of mass Production:
1. Mass production lowered costs and prices of engineered goods.
2. Thanks to higher wages, more workers could now afford to purchase durable consumer goods such as cars.
3. Car production in the US rose from 2 million
in 1919 to more than 5 million
in 1929.
4. Similarly,
there was a spurt in the purchase of refrigerators, washing machines, radios, gramophone players, all through a system of hire purchase on credit repaid in weekly or monthly installments.( EMI)
5. Large investments in housing and household goods seemed to create a
cycle of higher employment and incomes, rising consumption demand, more investment,
and yet more employment and incomes.
The Great Economic Depression ( Causes)
The depression was caused by a combination of several factors.
1.
First:
agricultural overproduction remained a problem. This was made worse by falling agricultural prices. This worsened
the glut in the market,
pushing down prices
even further. Farm produce rotted for a lack of buyers.
2. Second: in the mid-1920s, many countries financed their investments through loans from the US. US overseas lenders panicked at the first sign of trouble.
3. The withdrawal of US loans affected much of the rest of the world,
though in different ways.
4. In Europe it led to the failure of some major banks and the collapse of currencies such as the British pound sterling.
5. The US
attempt to protect its economy
in the depression by doubling
import duties also dealt another
severe blow to world trade.
The US was most severely affected by the economic depression-How?
1.
The
US was an industrial country most severely affected by the
depression. With the fall in prices and the prospect of a depression, US banks had also slashed domestic lending and called back loans.
2.
Farms could not sell their harvests,
households were ruined, and businesses collapsed.
3.
Faced with falling
incomes, many households in the US could not repay what they had borrowed,
and were forced to give up their homes, cars and other consumer durables.
4.
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.
India and the Great Economic Depression
1. India had become an exporter of agricultural goods and importer of
manufactures. The depression immediately affected Indian trade.
2. Peasants and farmers
suffered more than urban dwellers. Though agricultural
prices fell sharply, the colonial government refused to reduce revenue demands.
3. Peasants producing for the world market were the worst
hit.
4. They used up their savings, mortgaged lands, and sold whatever jewellery and precious metals they had to meet their expenses.
5. In these depression years, India became an exporter of precious metals, notably gold. The depression proved
less grim for urban India.
Second
World War
1. It was fought
between the Axis powers and the Allies
. It was a war waged for six years on many fronts,
in many places, over land, on sea, in the air.
2. At least 60 million people are
believed to have been killed and Millions more were injured.
3. Unlike in earlier wars, most of these deaths
took place outside the battlefields. Many more civilians than soldiers died.
4. Vast parts of Europe and Asia were
devastated, and several cities were destroyed by aerial bombardment
or relentless artillery attacks.
5. The war caused
an immense amount
of economic devastation and social disruption.
Reconstruction promised to
be long and difficult.
Two crucial influences shaped post-war reconstruction.
1.
The first was the US`s emergence as the dominant economic, political and military power in the Western world.
2.
The second was the dominance of the Soviet Union. It had made huge sacrifices to defeat Nazi Germany, and transformed itself from a backward agricultural country into a
world power .
Economists and politicians drew two key
lessons from inter-war economic experiences- what are they?
1.
First, an industrial society based on mass production
cannot be sustained without mass consumption. But to ensure mass consumption, there was a need for high and stable incomes.
2.
The second lesson related to a country`s economic links with the outside world. The goal of full
employment could only be achieved if
governments had power to control
flows of goods, capital and
labour
Bretton Woods Institutions (Agreement)
1. The United
Nations Monetary and Financial Conference was held in July 1944 at Bretton Woods Hotel in New Hampshire, USA.
2. The Bretton Woods conference established the International Monetary Fund (IMF) to deal with external surpluses and deficits of its member nations.
3. The International Bank for Reconstruction and Development (popularly known as the World Bank) was set
up to finance post- war reconstruction.
4. The IMF and the World Bank are referred to as the Bretton Woods institutions or sometimes the Bretton Woods
twins.
5. The post-war international economic system is
also often described as the Bretton
Woods system.
6. 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.
7.
In
1950s the Bretton Woods institutions began to shift their attention towards
developing countries and began
to give loans to them.
8.
At the
same time, most developing countries did not benefit from IMF
and WORLD BANK.
9. Therefore they organised themselves as the Group of 77 (or G-77) to demand a new international economic order (NIEO).
10. 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’
1. Earlier,
developing countries take loans from international institutions But now
they were forced to borrow loans from Western commercial banks and private lending institutions. This led
to periodic debt crises in the
developing world,
From the late 1970s MNCs also began to shift production operations
to low-wage Asian countries.
1. The relocation of industry to low-wage
countries stimulated world trade and capital flows.
2. 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
3. Wages were relatively low in countries like China.
4. Asia became attractive destinations for investment by
foreign MNCs competing to capture
world markets.
5. TVs, mobile
phones, and toys we see in the shops seem to be made in China? This is because of the low-cost structure of the
Chinese economy, most importantly its low wages.