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 16^th  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-16^th  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 18^th  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 19^th 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 19^th 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 19^th  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.      Britains 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 worlds 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. Across India, peasants indebtedness increased.

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.