INDUSTRIALISATION AND GLOBALISATION

Globalization:

• Globalization is the process of international integration arising from the interchange of world views, products, ideas and other aspects of culture. selfstudyhistory.com
• Advances in transportation and telecommunications infrastructure, including the rise of the telegraph and its posterity the Internet, are major factors in globalization, generating further interdependence of economic and cultural activities.
• The term globalization has been increasingly used since the mid-1980s and especially since the mid-1990s. The word “globalization” is derived from the verb “globalize”, which means “to make worldwide in scope”
• In 2000, the International Monetary Fund (IMF) identified four basic aspects of globalization:
  • trade and transactions,
  • capital and investment movements,
  • migration and movement of people, and
  • dissemination of knowledge.
• Further, environmental challenges such as climate change, cross-boundary water and air pollution, and over-fishing of the ocean are linked with globalization.
• Globalizing processes affect and are affected by business and work organization, economics, socio-cultural resources, and the natural environment.
• Though scholars place the origins of globalization in modern times, others trace its history long before the European age of discovery and voyages to the New World.
  • Large-scale globalization began in the 19th century.
  • In the late 19th century and early 20th century, the connectedness of the world’s economies and cultures grew very quickly.

Economic globalization:

• Economic globalization is the increasing economic interdependence of national economies across the world through a rapid increase in cross-border movement of goods, service, technology and capital.
• Economic globalization comprises the globalization of production, markets, competition, technology, and corporations and industries.
• Whereas the globalization of business is centered around the diminution of international trade regulations as well as tariffs, taxes, and other impediments that suppresses global trade, economic globalization is the process of increasing economic integration between countries, leading to the emergence of a global marketplace or a single world market.

Industrial Revolution and Modern Globalization:

• The 19th century witnessed the advent of globalization approaching its modern form.
  • It is said that industrial revolution marks the most fundamental transformation of human life in the history of the world.
  • In later centuries world economy began to emerge as a single unit in which advanced regions were linked to the colonies by certain division of economic activity.
  • These interactions may be described as a system of economic flows; trade, international payments, migration and capital transfer.
• From industrial revolution onwards, world economy got more integrated and the regions became more dependent each other. This tendency prepared a convenient circumstance for what we call ‘‘globalization’’ today.
• Other processes -migration from Europe, development of trade, colonization- are likely to have contributed to the globalization less than what industrial revolution did.
  • For the world before had witnessed both great population movements and colonization.
  • Neither Central Asian nomadic people’s migration toward the West or the colonization policies of Ancient Greeks or Romans did produce as the same result as that of migration from Europe or of European colonization.
  • So colonization and population movements could not be evaluated as the prominent factors on globalization; rather they became significant with unprecedented outcome of industrialization.
  • Without it European population migration could have remained as similar as to earlier population movements on the earth.

Link between Industrialization and Globalization

• As the review of history of industrialization demonstrates, the world has been undergoing to the globalization process at least for the last four centuries.
  • Before that time grand civilizations, empires and economy had remained confined to certain regions. Mesopotamian Civilization remained around the Tigress and Euphrates.
  • Roman Empire controlled environs of Mediterranean.
  • Silk Road trade was confined to the regions beginning from China and India through the south and the north of Caspian Sea to Mediterranean and Black Sea.
  • Neither of these big structures nor others was able to connect all parts of the world to each other in contrast to what we are experiencing today.
• There are different arguments attempting to explain the roots of this expansion -currently globalization. Many factors are seen behind the globalization process:
  • Fundamental social and political changes during reformation era,
  • migration of Europeans to the new world,
  • colonization of non-European territories,
  • industrial revolution which incited the emergence of world capitalist economy and
  • development of technological changes are all seen as the
• If globalization phenomenon is described as a grand process, then former developments could be seen as steps to it. However, one should give special attention to industrialization in the explanation of the origins of globalization.
• When we come to the origins of industrial revolution, we see that drastic social and political changes in Europe in the 15th and 16th centuries opened the way to it.
  • Reformation and enlightenment fundamentally transformed European societies whose consequences in economy paved the way for the rise of global market.
  • Reformation decreased the power the Pope and led to national unifications, and enlightenment freed human reason from scholastic framework.
  • The implications of these changes were so great, that is, innovations, new way of thought, development of physical sciences and the emergence of an unprecedented human adventure in history.
• In anyway it could be argued that most prominent impetus of globalization process is the capitalist world economy which was incited by the industrial revolution.
  • It created its own structures all over the world based on capitalist mode of production, whose main components are production, consumption, international trade, rivalry and wars among competing states.
  • While the motor of globalization is the capitalist world economy, its implications are currently felt in every field, such as culture, politics, society, environment, arts and way of life. But in this chapter we will limit ourselves to show close link between industrialization and globalization.
• Beginning of overseas trade contributed to the development of navigation which created competition among European states.
  • Internal wars in the 17th and 18th centuries were transferred to overseas rivalries. Spain, Portuguese, France, Netherlands and England were the main powers in this struggle.
  • Most of the European states created their own domestic market and established trade links between colonies and homeland.
  • Creation of home market was the result of abolition of feudal privileges, granted to landlords over vassals and the church over its land.
  • Confiscation of soils of the church, liberation of vassals from the land and the undermining of guild system resulted in the emergence of a genuine home market. Because, both idle lands controlled by landlords and by the church and labor force were brought to the market.
• Moreover, because dependency link between labor force and land was broken, men had to work more for subsistence.
  • This created rising demand for primary products like food and clothing. However, it was very usual in that period that people did not need to work when they were provided with their basic needs. As done by Poor Law in England, wages were kept down to encourage people to work more for survival.
  • Hard work furthermore resulted in more need to work. This was an enduring interaction between working more and more needs.
    • In England, low wages resulted in lower cost of textile products and Englishmen began to export clothes first all over Europe then to the whole world.
    • Due to that fact textile industry was the first step of industrial revolution.
• Colonies at first instance were used to obtain raw material, particularly cotton. But as the industrial revolution resulted in increasing production, the importance of colonies increased once more as markets to export textile products.
  • New techniques in production process brought competition and were easily adopted by other European countries.
  • The aim of domestic production soon exceeded the borders of home market, as the whole globe became the target of capitalists.
  • Innovations and inventions accelerated to reduce the production cost and to attain competitive prices.
• The crucial relation between the rise of capitalism and the formation of nation states in Europe is very important to understand the nature of globalization.
  • The development of trade in the 17th and 18th centuries in Europe was accompanied by scientific outlook, state building and wars.
  • The usage of gunpowder helped central rulers to remove the local lords and reformation broke loyalty beyond national borders.
  • To finance their wars rulers encouraged taxable activities, mainly trade and production of primary agricultural products.
• Both development of capitalism and state building in Europe fed each other.
  • Merchants, entrepreneurs, investors and bankers had sought for a secure area for profit and the rulers had needed taxable activities to finance their private armies.
  • The aim of both parties overlapped following the 17th century.
  • Nation states were formed and capitalism began to flourish. Capital gained a national character and states protected their capitalists by introducing high tariff barriers in newly industrializing countries, while industrialized countries like Britain forced the former ones to remove trade barriers.
  • At its early formation European states projected colonial foreign policies to facilitate the activities of their businessmen in overseas.
• However, after the late 19th century, centralized governments backed by standing armies and strong bureaucracy turned into absolutist regimes.
  • Moreover, as the capitalist investments began to enlarge and production increased, aim of capitalists went beyond the national market. (The World War I could be seen a result of irreconcilable imperial policies of European countries, while the World War II partly was resulted from the character of national capitalism.)
  • Once the national capitalism had been formed within secure national borders, it started to accelerate the forces of globalization through its activities abroad that would have soon created an interdependent world capitalist economy.
• Free trade formulation also contributed to globalization.
  • Ancestor of free trade, Adam Smith argued that resource over the earth could be utilized at optimum level just through an international free trade. By this there exists a division of labor among countries, that is, a country inevitably will produce the commodity for which it has advantageous price. This theory was advocated mostly by English scholars, because England was believed to be the most industrialized country.
• It seems that industrial revolution is a turning point in the emergence of world economy.
  • It strengthened capitalism and gave it a global character. Because industrialization created a new kind of society and market relations, world capitalist economy found a convenient circumstance to grow on a global scale.
  • Globalized market triggered other dynamics in terms of nationalism, culture, religion, identity and locality all over the world.

Why Industrialization Was Main Impetus To Globalization?

• Defining features of globalization seem to be the results of ‘‘something’’ that is industrial revolution. There are many outcome of what the world has undergone for the last few centuries like:
  • interdependence among countries,
  • increasing world trade,
  • interconnected financial markets,
  • liberalization and democratization,
  • expansion of consumption culture,
  • homogenization in arts and entertainment and
  • emergence of politics of locality in terms of authentic culture and identity.
• So to understand better why industrial revolution is the main impetus behind the globalization process one has to look at the logic of industrial production and its globalizing forces.
  • In a traditional society people manage to become self-sufficient in most of their needs. Foods and clothes could be extracted from land or animals to a great extent.
  • It is true that worldwide trade had always existed among countries and continents. But this trade was more related to luxury commodities that had targeted a small segment of societies. The rest of the society seemed to be self-sufficient in their needs.
  • So trade that is represented as one of the causes of globalization could be taken as a determinant factor. However, logic of industrial production has transformed the economic life of people.
    • First, because it focused on massive production, production cost of many products has decreased.
      • Before industrialization the world was in equilibrium in terms of economic activities including rural and city life.
      • But industrialization in Europe began to remove this equilibrium and created massive opportunities for competitions and wars among states.
      • Massive production created new area of human settlement those are industrial cities.
    • Second, it required different type of combination of inputs in terms of raw materials.
      • Whereas in traditional production number of inputs was so limited, this number and varieties of inputs has dramatically increased.
      • Because each region possessed different kinds of raw materials, secure route to and control them became a strategic objective.
      • This increased the intensity of competition among European powers to control colonial territories.
    • Third, reduction in costs and resultant massive production necessitated marketing strategies on global scale.
      • As the amount of production increased, colonies began to be transformed from becoming sources of raw materials into markets for industrial commodities.
    • Fourth, cheaper production, need for raw materials and markets fostered dependency links among regions.
      • Trade and economic relations has increased not because of luxury products as it is as in the case of traditional trade but because of basic needs of ordinary people.
      • This tendency expanded the scale of economic activities all over the world.
    • Fifth, these developments prepared infrastructure for the emergence of worldwide financial system that connected markets more tightly to each other.
      • Prices of raw materials and of industrial commodities began to be determined in a competitive environment where some cities of the world began to be the centers of financial services.
      • Particularly after the beginning of the second half the twentieth century production and financial services became a new source of division of labor among countries.
      • While many production facilities certainly defined as ‘‘heavy production’’ have been transferred to developing regions, financial services including banking, credits and insurance began to be focal economic activities of early industrialized countries.
• Industrialization allowed cheap production of household items using economies of scale, while rapid population growth created sustained demand for commodities. Globalization in this period was decisively shaped by nineteenth-century imperialism.
  • After the First and Second Opium Wars, which opened up China to foreign trade, and the completion of the British conquest of India, the vast populations of these regions became ready consumers of European exports.
  • It was in this period that areas of sub-Saharan Africa and the Pacific islands were incorporated into the world system.
  • Meanwhile, the conquest of new parts of the globe, notably sub-Saharan Africa, by Europeans yielded valuable natural resources such as rubber, diamonds and coal and helped fuel trade and investment between the European imperial powers, their colonies, and the United States.
• Globalization is about everything that connects all parts of the world to each other. But as it is explained above, one has to recognize that the main determinant of ways going to globalization is the logic of industrial production.
• Because of this reason, although many outcomes of globalization are related to society, culture and politics; the prominent agenda of globalization are occupied with issues like trade, finance, investments and standards all of which are components of industrial mentality. So globalization is still embedded so highly to the logic of industrial production and its global requirements.
• In sum, it could be argued that substantial social and political transformations in Europe after the 16th century resulted in the rise of capitalist economy. But without industrial revolution it was hardly possible that it could have expanded on a global scale. Because of industrialization, capitalism succeeded in establishing a world wide market in which all parts of the world, whether developed or underdeveloped, are getting integrated within the global transactions. Globalization process we are experiencing today is running on the global market structures created by industrial revolution.