History of Globalization
In this article, we shall examine the history of globalization. We will discuss early forms of globalization, as well as past and present trends with the framework of globalization. We will also discuss various arguments with regards to whether globalization is a new phenomena, or whether similar globalizing patterns have emerged in years or centuries past.
Some scholars argue that there have been various fluctuations of globalization. For example, Michael Bordo (2002) has argued that “Globalization, in the sense of increased integration of international markets, has waxed and waned throughout history. Most recently, it thrived between the middle of the nineteenth century and World War I, languished and retreated until about 1970, and has thrived again since then” (20).
While many want to focus only on the newer periods of globalization, dating the history of globalization to more recent time times (whether it was the telephone, automobiles, air travel, or the Internet), globalization is as old as the human race. For example, while there is significant attention to recent globalization patterns and trends, scholars argue that the history of globalization can be found as early as the first humans, and even earlier. For example, McNeill (2015) explains that “…sporadic increases in the capacity of transport and communication are age-old among humankind and have always changed behavior. That process began when our pro to-human ancestors learned to control fire and dance. Fire eventually allowed humans to accelerate the recycling of organic vegetation by deliberately setting grass and brush alight in dry seasons of the year; and to survive subfreezing temperatures even in the Arctic. Control of fire was so valuable that all surfing humans acquired that skill, beginning as long ago as 400,000 B.C.E. (141). McNeill (2015) also highlights the importance of dancing to early humans. Speaking on the development of dance, he says that “Dancing aroused a different kind of warmth by communicating a sense of commonality to participants that dissipated inter-personal frictions.
That, in turn, allowed human bands to expand in size beyond the limits our chimpanzee relatives sustain today. The advantages of larger numbers of cooperating individuals were so great that all surviving humans learned to dance…and in all probability it was among bands enlarged and sustained by dancing on festival occasions that language, the principle vehicle of subsequent human communication, developed between 90,000 B.C.E. and 50,000 B.C.E.” (141).
Language also allowed humans to communicate with one another, and to make agreements, which have been critical to help cooperation amongst humans. This use of language can help understand the past, and better help humans as they plan for the future. Language was particularly helpful when humans faced adversity, or if their actions were ineffective for some task; language helped early humans (and humans today) communicate about what could be done better the next time around (McNeill, 2015).
Humans were also able to migrate because of technological advances. For example, fires allowed them to burn land for easier movement. In addition, the creation of rafts allowed them to go to islands such as Australia (McNeill, 2015). And following advanced movement through different lands, humans then learned about plants,which in turn allowed them to become agriculturally savvy; they learned “[w]ays to multiply the number of such plants by weeding and seeding and transplanting roots that grew naturally may well have been familiar to many hunters and and gatherers long before they ever thought of settling down in a single spot and raising food crops in fields where they did not grow of their own accord” (McNeill, 2015: 142).
But we did see heavy emphasis on communities farming various crops throughout the world from 8000 B.C.E. to 4000 B.C.E. And with these various agricultural communities forming, shortly after humans began increased interactions with different communities, which in turn led to meeting new people, and trading goods amongst different settlements. Thus, “[c]onsquently, the pace of social change accelerated systematically within each of the major centers of agriculture, because more people made more inventions…” (McNeill, 2015: 143). These cities served as key centers for trade and exchanging of goods and new technologies. Humans began long travel patterns to other human communities for trading. And as more cities and empires developed and arose, the interconnectedness of these various areas only increased (McNeill, 2015).
The History of Globalization: 17th and 18th Century
As I shall discuss shortly, scholars argue that one of the largest periods of globalization was in the mid-1800s, up until World War I. While it is necessary to discuss that period of growth as it relates to the overall history of globalization, we should also better understand the conditions that existed in the world leading up to the time period. Prior to the industrial revolution in the mid-late 1700s until the early 1800s, a great deal of economic output was rather restricted to a few countries. For example, “In 1750 more than 50 percent of the world’s industrial output was produced in China and India, compared to some 18 percent in Western Europe” (Crafts & Venables, 2003: 325). Furthermore, “During the seventeenth and eighteenth centuries, world trade had expanded at a steady clip of around 1 percent per year, outpacing the rise in world incomes but not greatly so” (Rodrik, 2011).
However, following the Industrial revolution, the numbers in Europe grew rapidly. In fact, “The following eighty years saw the Industrial Revolution, with western Europe’s industrial output more than doubling and that of the United Kingdom increasing by a factor of 7” (325). In addition, “Starting sometime in the early part of the nineteenth century, world trade began to grow by leaps and bounds, registering an unprecedented rte of almost 4 percent per annum…” (24).
In fact, when looking at production, it rose greatly in Europe from about 1820 onwards, with the fall of China and India at roughly the same time period (Crafts & Venables, 2003).
History of Globalization: 19th and 20th Centuries
The time period between the mid 1800s and World War I was seen as one of the most significant periods of globalization the world has ever seen. There are multiple reasons as to why scholars believe that this was an important period of globalization, and it has to do with evidence related to overall market integration (through transportation and transportation costs), as well as the rise in migration numbers, and capital investment.
One way to examine globalization is to do so through market integration. Bordo (2002), citing Findlay and O’Rourke (2001), cites two aspects of globalization, which are the “(a) growth of international trade relative to population and income and (b) convergence in the prices of trade commodities” (21). According to Michael Bordo (2002), there have been two key periods with significant globalization in the last two centuries: the period in the mid-late 19th century until roughly 1914, and the current period, beginning the 1970s onwards. And as Rodrik (2011) explains, “[s]tarting sometime in the early part of the nineteenth century world trade began to grow leaps and bounds, registering an unprecedented rate of almost 4 percent per annum for the century as a whole” (24).
Globalization and Transportation Costs
Part of the reason for the rise in globalization had to do with transportation and communications costs, which were falling greatly in the 1800s (Rodrik, 2011). Interestingly, it has been argued that “Although distance remains a barrier even at the start of the twenty-first century, the continuing communications revolution has been one of the most outstanding features of the last 200 years” (Crafts & Venables, 2003: 329).
During the 1800s, the rise of steam transportation, as well as increased communications lead to a great rise in trade and globalization (McNeill, 2015). Citing Findlay and O’Rourke (2001), Bordo (2002) explains that “On both dimensions [discussed above], although the process of international integration began with the opening up of the world in the Age of Discovery in the sixteenth century, the major spurt in globalization didn’t really occur until after the Napoleonic wars. The growth of trade from 1500 to 1800 averaged a little over one percent per year, while population grew at 0.25 percent. Between 1815 and 1914 trade (measured by exports) grew by 3.5 percent per annum versus real income growth of 2.7 percent” (21). However, following World War I, while trade export volume and real output grew, there was a sharp decline during the Great Depression, then an uptick in 1931 until about 1935, and then another decline in 1936.
Thus, trade was driven in part by domestic politics. For example, “The estimate of the unweighted world average tariff rate given by Clemens and Williamson (2001) and illustrated in figure 7.5 rises from about 12 percent in 1865 to 17 percent in 1910. In the interwar period, at a time when transport costs had ceased falling, trade wars pushed the Clemens-Williamson tariff rate up to 25 percent at its 1930s peak, and, in addition, quantitative trade restrictions proliferated, affecting perhaps 50 percent of world trade (Gordon 1941). After World War II, the Clemens-Williamson tariff rate is in the 12–15 percent range, where it remains until the 1970s, after which it falls to a low of 7–8 percent in the late 1990s” (Crafts & Venables, 2003: 329). One sees that in periods of increased trade, one of the factors seems to be policies that stress reduction in barriers, and more general economic liberalization.
And, in the case of reductions in tariffs and protectionist policies, trade rose. When there were domestic economic problems, trade was also effected.
History of Transportation Costs
In addition, when looking at overall trade, it seems that during the mid 1800s until roughly the first World War, not only did commodity prices related to one another across countries become closer to one another due to decreases in the cost to transport materials throughout the world. But along with this, tariffs also declined. This allowed an increase in globalization.
Furthermore, there was also a rise in transnational migration patterns during this time period, but decline following the first World War (Bordo, 2002). Regarding this issue of international migration, Bordo (2002), citing Chiswick and Hatton (2001), explains that “[b]efore the nineteenth century, migration from the Old to the New World went through three stages: 1600-1790 slaves and contract labor; 1790-1850 free settlers; 1850-1920 mass migration. In the case of mass migration from Europe to primarily the U.S., Canada, Australia, and Argentina, 300,000 per annum moved between 1850 and 1880, 600,000 between 1880 and 1900, and over a million between 1900 and 1910…” (22).
Foreign capital also seems to follow the two time period of increase; there was a rise in foreign capital until World War I (with Britain playing a key part in the overall percentage of foreign capital investment), as well as in recent decades since the 1970s. Much of the decline has to do with controls and domestic limits on capital investment, such as in the United States (Bordo, 2002). However, when one looks at the foreign investment during these times, particularly the first period discussed, it becomes evident that foreign investment was mostly by a handful of countries.
For example, “[t]he British held the lion’s share of overseas investments in 1914–fifty percent–followed by France at twenty-two percent, Germany at 17 percent, the Netherlands at three percent and the U.S. at 6.5 percent” (23). This is different than more recent figures, which shows a rise in the United States foreign capital at about 24 percent in 1995 (Bordo, 2002). Plus, there does seem to be more actors involved in borrowing and lending recently compared to the early 1900s (Bordo, 2002).
However, looking at why globalization was so important to these actors, Rodrik (2011) argues that much of it had to do with the belief system of those economists at the time. Speaking on the issue of the spread of globalization in the 1800s and early 1900s, Rodrik explains that there existed “…a convergence in belief systems among the period’s key economic decision makers. Economic liberalism and the rules of the gold standard connected policy makers in different nations and led them to coalesce around practices that minimized transaction costs in trade and finance.” He also writes that “from the 1870s on, the widespread adoption of the gold standard enabled capital to move internationally without fear of arbitrary changes in currency values or other financial hiccups” (25).
Where this narrative of overall free trade and economic liberalism held sway–as in Britain and among the world’s major central banks throughout the entire period–globalization remained safe. Where it was absent or dissolved over time–as with trade policy in Continental Europe after the 1870s–globalization lost ground” (25). We see this from the mid-1800s. For example, some of the first key acts of economic liberalization in Northern Europe was the introduction to “Corn Laws” which reduced tariffs on grain imports in Britain. Shortly after, other states followed suit, which in turn led to drastic changes in food prices, and, in turn, the labor market (Rodrick, 2011). In addition, many European states opened trade with one another through the Cobden-Chevalier treaty which had a most-favored nations clause within it. Here, “The clause required that the original signatories also receive any tariff reduction one of them subsequently grants to third countries. This network of trade barriers became an important instrument of tariff reduction throughout Europe during the 1860s and 1870s” (Rodrik, 2011: 28).
Again, it is important to note that whether a country was open to free trade (reduced imports) had a lot to do with their own political interests (as state leaders) at the time. If one was a heavy exporter, such as Britain, lowering tariffs might be in a state’s best interest, as it was in their case. However, if one wants to protect their local industries, as was the case in the United States in the 1800s, then free trade would be seen as an issue (Rodrik, 2011). However, he argues that along with rising technologies that reduced transportation and communication costs, as well as a free market philosophy, and the importance of the gold standard (which made many feel safe to enter into international trade of their goods), one must not overlook the role of imperialism with regards to globalization.
Explaining the role of imperialism with regards to globalization at the time, he writes that “[w]hether of a formal or informal kind, imperialism was a mechanism for imposing trade-friendly rules, a type of “third-party enforcement,” with the governments of the advanced countries as the enforcer. Imperialist policies deployed the political and military power of the major countries to bring the rest of the world into line whenever possible. Hence they provided an important backstop to globalization being derailed in the peripheral parts of the world economy–Latin America, Asia, and the Middle East–and could be used to render these regions safe for international trade and finance” (26).
History of Globalization and Capital Flows
Along with the movement of goods, as well as labor (through migration patterns), one other important factor to to examine as it pertains to the history of trade and globalization is the issues of capital flows, and whether capital moved at greater numbers during any particular years or time periods. Bordo (2002) argues that there exists a “U-shaped” pattern with high capital flows prior to World War I, then then a drop from post WWI unit labour 1970. Bordo (2002) writes on capital flows before WWI, saying: “The fifty years before World War I saw massive flows of capital from the core countries of Western Europe to the overseas regions of recent settlements (mainly the rapidly developing Americas and Australasia). At its peak, the outflow from Britain reached nine percent of GNP and was almost as high in France, Germany, and the Netherlands. Private capital moved essentially without restriction. Much of it flowed into bonds that financed railroads and other infrastructure investments and into long-term government debts” (23). While there was a drop in capital flows following World War I and until about 1970, these capital flow percentages have risen since then (Bordo, 2002).
Globalization and GDP Growth
Overall, GDP figures, particularly in Europe, rose greatly during the 1800s and 1900s, even extending to more recent trends. At the same time, we saw a large drop in those figures related to countries such as China and India, who in the past had much higher GDP percentage outputs. As Crafts & Venables (2003) write: “
Whereas in the 1820s China and India accounted for a little over half the world’s population and a little under half of world GDP and industrial production, by 1913 western Europe and North America, with about one-fifth of the world’s population, produced over half of world GDP and nearly three-quarters of world industrial output. By 1998, with a rather smaller share of world population, these countries still accounted for well over half of world industrial output, whereas China and India, with over 40 percent of world population, produced only about 8 percent of industrial output” (327).
America and Globalization
It is interesting to look at the specific relationship between America and globalization during this time period. While Europe grew in terms of GDP growth and production, the United States was one of the largest growth states during this period of globalization. At the same time that America was growing during globalization, Latin America, for example, did not see the same level of growth. Scholars argues that to explain America’s globalization during this period, one has to look at issues such as the support for property rights, as well as the types of political institutions within the United States at that time, which not only increased wealth (of course this was for many economic and political elites), but also helped in terms of good conditions that led to growth, as well as immigration (Engerman & Sokoloff, 1997). Crafts & Venables, citing David and Wright (1997), say that these scholars: “have pointed to several highly favorable aspects of American institutions and policies for the exploitation of abundant resources that led to American primacy in the minerals-based, re- source-intensive technology that was central to technological progress in the early twentieth century. These included promoting education and scientific research in relevant disciplines, subsidizing transportation, and organizing geological surveys and sustaining minerals property rights but without claiming government entitlement to royalties. Organized thus, American endowments promoted a technological trajectory that no European country could emulate” (338).
Discussing the issue of America and globalization, Crafts & Venables (2003) argue that while these are important, it is also necessary to look at the size of the United States at the time, as well as sections of the country. For example, speaking about the Northeast, they point out that GDP levels were similar to the UK in 1880, and had similar population numbers by the turn of the century. Furthermore, they write that “The growth of the New World economies was boosted by massive factor flows from the Old World. Declining costs of transport, together with rising incomes in a world relatively free of immigration restrictions, encouraged large international migration. Between 1870 and 1910 this augmented the New World labor force by 40 percent while at the same time reducing the Old World labor force by 13 percent” (338).
Challenges To Globalization
Globalization and Disease
However, some areas, due to the lack of disease, or less reliance on foreign contacts for new technologies, were able to globalize and transform more than others, or, the role of disease altered the trajectory of said globalization (McNeill, 2015). For example, as McNeill (2015) explains that “[b]iological resistance to a long array of infectious diseases, from the common cold to small pox, measles, plague, and others, was the single most decisive factor in compelling previously isolated populations to submit to intruders from the disease-experienced Eurasian web. The most lethal of these diseases were transfers from animal herds. Eurasia’s uniquely complex array of domesticated–and some wild–animals had exposed civilized Eurasian peoples to these diseases across millennia, not without wreaking serious damages along the way” (144). He goes on to add that those who were exposed to these diseases were devastated; a lack of immunity killed many, whereas those with previous exposure were not nearly as impacted (McNeill, 2015). We saw the effects of diseases with the travels of Europeans to South America, Central America, and in the United States, Mexico, and Canada.
Who Benefits From Globalization?
Looking at historical trends of globalization, one finds that certain states have benefited much more than other states. For example, in the 1800s, there were only a select few countries (such as Britain and some other states in northwest Europe) that reaped the rewards of globalization. In the early 1900s, the United States, some additional states in Europe, and Japan also benefited from rising globalization. Then, between the first and second World Wars, many Latin American states, some African states, as well as the U.S.S.R. become more globalized. Then, in the 1990s, most of the other world states were involved in globalization (Delong & Dorwick, 2001, in Bordo, 2002: 25). However, looking at the history of globalization, scholars argue that it has benefited Western European states, and now the United States, much more than other states (Lindert & Williamson, 2001 in Bordo, 2002: 26).
The Backlash of Globalization
Bordo (2002) also points out that there was a backlash against globalization following the early 1900s. Much of this had to do with political interests, and the reaction by those negatively affected by new economic developments. For example, with regards to globalization in the late 1800s until the early 1900s, “[t]he massive migrates in the 1870 to 1914 period reduced the returns to land owners in the land-scarce, labor abundant countries of Europe and at the same time worsened the income distribution in the countries of recent settlement, as unskilled immigrants competed with more established workers for jobs” (Bordo, 2002: 28). And, because of this, “[a] political backlash ensued in each region. In the Old World, landowners successfully lobbied for increased tariff protection of agriculture in the last two decades of the nineteenth century. In the U.S., Canada, Australia, and Argentina, labor was ultimately successful in closing the doors to migrants by the second decade of the twentieth century. The backlash to globalization in turn may have fanned the flames of nationalism and been a key cause of World War I” (Bordo, 2002: 28). And during the Great Depression, we saw more isolationist policies, which included limiting immigration, as well as increased trade tariffs, along with reductions in foreign capital investments (Bordo, 2002: 28).
Rodrik (2011) makes a similar argument in his discussion on post World War I domestic and international trade policies when he says that workers were demanding alterations in government policies on trade, particularly since many believed it was to blame for high unemployment rates. There were also increased calls for protectionism following the first World War, particularly after the Great Depression. Not only were people suffering economically, but “[a] politically empowered and active society–the joint result of industrialization, democratization, and World War I–demanded greater economic protection from the government in the face of extreme adversity” (45). He also suggests that this could happen again; globalization does not necessarily have to move in a positive trend or direction, but in fact, there could be counter-globalization forces at play.
History of Globalization References
Bordo, M.D. (2002). Globalization in Historical Perspective. Business Economics, January 2002, pages 20-29.
Chanda, N. (2015). Chapter 12, Slaves, Germs, and Trojan Horses, pages 149-175, in Manfred B. Steger, The Global Studies Reader. Oxford, England. Oxford University Press.
Crafts, N. & Venables, A. (2003). Chapter 7: Globalization in History: A Geographical Perspective, in Globalization in Historical Perspective. Michael D. Bordo, Alan M. Taylor, & Jeffrey G. Williamson, (eds.), pages 323-369.
Dowrick, S. & Delong, J.B. (2001). Globalization and Divergence. In, Bordo, Taylor, and Williamson.
Findlay, R. & O’Rourke, K. (2001). Commodity Market Integration 1500-2000.
Lindert, P. & Williamson, J. (2001). Does Globalization Make the World More Unequal.” Bordo, Taylor, and Williamson.
McNeill, W.H. (2015). Chapter 11, Globalization: Long-Term Process or New Era in Human Affairs?, pages 141-148, in Manfred B. Steger, The Global Studies Reader. Oxford, England. Oxford University Press.
Rodrik, D. (2011). The Globalization Paradox: Democracy and the Future of the World Economy. New York, New York. Norton.