The phenomenon is much older. Pepper, corn and potatoes from Latin America are common nourishments in India, Europe or Africa. Spices from Indonesia are common in the Caribbean. Descendants of African slaves brought to work in the “new world” became Americans, Jamaicans, Canadians, Brazilians or Guyanese. American cotton, which helped produce the first phase of the European industrial revolution, is cultivated in Egypt and Sudan.
But globalization as we know it today gained a new dimension due to rapid changes in the last 25 years. The revolution of micro-electronics has irrevocably changed the face of human contacts on earth. The internet and the World Wide Web have helped this process, allowing for more accessible communication, more efficient and also fast, so that they have been dubbed “the third wave” of economic growth. Fast and cheap transportation and instant communication have homogenized and enlarged commercial culture. The American way attracted and converted millions of people, whether they are rich or poor. “At the same time today, one may find a lot of
“national” foods – Thai, Mexican, Indian – all across Europe.” Actually, many English residents or visitors believe that globalization and culinary “fusion” is the best thing that happened to English cuisine in the last 500 years” – says Wayne Elliwood.74
74 Ellwood, W. 2001. The non nonsense guide to globalization. Oxford. New Internationalist 49
The great geographical discoveries will be the foundations of this phenomenon. For the
“classical” period Cecil Rhodes – a famous imperial spokesman – is the one who, in 1890 defining colonialism also stated the essence of the globalization phenomenon: we must find new lands from which we can obtain raw materials and at the same time to exploit them trough cheap work of local slaves. Colonies will offer, at the same time, a dumping space for our surplus of products, manufactured in our factories.” Before him, the nature of the phenomenon would be “blessed” by Pope Leon the 10th trough the famous edict which would divide the New World between Spain and Portugal. Thanks to Columbus, a new opportunity appeared which set the base for European imperialism: the fight was vicious, as English, French, Dutch, Spanish, Portuguese, Belgians, Germans and later Americans will take into possession lands which will be later dubbed as “the third world”. Great Britain, and later the USA – exiled Europeans - will win this battle trough cunning, force and hard work in their industrial factories. But only Rhodes’s vision imposed itself.
Around 1860 – 1870 world commerce boomed. Richness from the colonies flooded the metropolis.
At the same time, it left cities colonies bound as investments into railroads, harbors, roads, towns.
“Globalization” was so great then that capital transfers from the “north” to the “south” were bigger at the end of 1890 than at the end of 1990. In 1913 (one of the peaks of economic integration) exports in major cities outmatched levels recorded in 199975. Cheap transports were the foundation of globalization. But “Europe has spread, throughout the world, before 1914, not only its capitals and techniques, but also it’s most important languages, religion, its criteria and its evaluation parameters”76. But at that time mondialization was the main topic, the contents of the term being detailed clearly enough in the DEX (see also annex 3). And Professor Dan Popescu also explains:
“is mondialization subject to interpretation, at the same time, as an effect of the neo-liberal wave which “undermined” and “thinned” many rules which were obstacles in the way of free trading of goods, creating new rules which favored and favor of an important manner the free circulation of capitals. Actually, globalization is strongly integrated with this aspect: free circulation of capitals, which in turn is bound, by the ability of capital to obtain bigger profits than the ones from which it came.”
It was still early on the global scene! In America, Ulysses Grant, former U.S. president, said in 1879: “Gentlemen, England used its protectionist system for 200 years, brought it to excess and it was good….after….it found a convenience in shifting to free trade, because it had no more use for protectionism…I believe that…when America would has removed its protectionist system after exploiting it to its fullest, it will also choose free trade in a decisive manner”77.
Two world wars followed, in which European powers or Asia’s Japan eroded, exhausted their forces and reserves, both their material resources and their stamina as dominant warriors. The USA assumed control. Americans of European origins returned to Europe and entered Japan.
Unbeatable in marketing, they seized the hour of revenge: cheap transports, fast communication, the immense anti-communist market, the competition with the Bolshevik bloc, created the perfect environment. Furthermore, the end of the war gave them the opportunity to impose the “American spirit” – not a “Pax Americana”, not an empire, rather an American dominion, dominion which will give freedom to all, freedom to roam the earth with “in God we trust” , towards the profit of the American treasury.
The Bretton Woods conference was supposed to establish a working system within the postwar world economy – a stable and cooperative international monetary system which would promote sovereignty and prevent financial crisis. The purpose was to save capitalism, and not to destroy it. The main proposition was the one regarding the fixed exchange rate system. The instrument: the International Monetary Fund. Keynes’s influence was important. But a strong opposition by the military and economic American environments demolished his proposals: a
75 Ellwood, W. 2001. The non nonsense guide to globalisation. Oxford. New Internationalist
76 Popescu, D. - Mondializarea: între continuitate şi rupturi în volumul Economia ca spaţiu deschis . Ed. Continent 2002
77 quote after Popescu, D. – Economia ca spaţiu deschis . Ed. Continent 2002 50
world monetary reserve administered by a world bank was not in accordance with USA’s interests, a country which wanted to become the world economic power. In exchange, a free movement of goods was convened upon, using the USD as an international currency. The GATT was created, which established a series of regulations which would lead world commerce. There have been 7 rounds of negotiations. In 1990, the WTO was created in Marrakech, with 137 members and 30 observers. It introduces one member’s commercial sanctions upon another, especially against a member which does not approve with the interpretation of the organization regarding world commerce. The third pylon, the political one, was the UN, a democratic system in which the General Assembly makes recommendations, and the Security Council takes the decisions.
The term Grant had asked for had passed. The Americans translated the term mondialization from English to American; they began to “globalize”, which means to expand in other parts or in all parts of the globe, to spread the American system across the world. There was no further need for protectionism, the world needed open doors for the American system, a system submitted to profit, profit at any price, anywhere, anytime and anyhow.
The 70s came, when poor people, but especially countries rich in oil rebel and use the boomerang that the USA had cast: Eurodollars, Petrodollars, Japan dollars. Enter crisis. Actual globalization is different from the one in 1970 also because of the collapse of the system of rules established after the Second World War. The Bretton Woods accord in 1944 brought 25 years of relative and stable economic growth. But around 1980 things began to change. Strong, neo-liberal governments, which promoted free markets in England and the US, applied new therapies. The chosen formula for economic progress, as it was chosen by Margaret Thatcher in Great Britain and Ronald Reagan in the USA asked for a drastic reduction of the state’s regulatory role. In exchange, the government had to sit behind managers of corporations and of those from the financial world. The general philosophy was that corporations must be free to exchange operations anywhere in the world in order to minimize costs and maximize payments towards investors. Free trade, unrestricted investments, diminishing of regulations, equilibrated budgets, low inflation and the privatization of enterprises were hailed as a six step plan towards national prosperity. Between 1979 and 1994, the number of jobs in the public sector in Great Britain was reduced from 7 to 5 million. At the same time, the number of newly created jobs was mostly in enterprises which were not parts of unions, poorly paid, in the service sector. Susan George called privatization in England as “one of the biggest scams in our generation or since the dawn of time”78
At the same time with the expansion of free goods and services trading, a diminishing of regulations was made regarding world financial markets. Banks, insurance companies and investment funds, supported by computer technology and government support were free to invest their cash surplus in anything that could bring a quick profit. In this new and relaxing atmosphere, financial capitals had a destabilizing influence on the global economy. In stead of long term investments in effective production of goods and services, speculators were making money from money, without taking into account the impact of their investments on local communities or national economies. Governments began to fear the destabilizing impact of this global financial casino. Recent studies indicate the direct connection between the frequency of financial crisis and the growth of international capital flows in the 90s. The East Asian crisis which began in 1997 is an edifying example. Until 1990, foreign investments were strictly controlled. After that, hundreds of billions of USD entered and exited from one year to another. The reduction of regulations and rules in world finances coincided with a microelectronic revolution. And a leakage in capital flows also existed. This uncontrolled speculation, which Keynes had predicted, eclipsed long term investments. The roulette is rolling: les jeux sont faits!
The world had another pole. A big one, with a lot of populace, with huge problems: “the third world”. Alone or within alliances, states try to save themselves or at least reach stability.
78 George, S. - A short history of neoliberalism - comunicare prezentată la conferinţa “Suveranitatea economică în lumea globalizată” Bangkok 1999
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Most of them were lead by dictators privileged for the resistance in the face of communist expansion79. Since the mid 60s until the mid 80s, 25 countries had been given 500 billion USD worth of loans. They were used to maintain dictatorships in the third world. But democratic states also take loans, especially those from South America, Africa and Asia. Economic performance is overdue, back payment becomes improbable. Security structures intervene: The IMF and the World Bank with almost typical programs: decreasing the currency and decreasing government expenses. They were thus included on the “black list” of trust. The IMF imposed structural adjustments as well. Unaccepted at the beginning, Mexico being an example. But the IMF and World Bank impose a restructuring plan which required massive adjustments. They impose drastic reductions of expenses even in vital domains and force a growing of exports even if this meant decreasing basic production, like foods and other consumption items. The Structural Adjustment Program is set in motion, basically a system of transforming private debts into public ones. In 1980, total debts for third world countries reached 1500 billion USD. In 1999, they reach 3000 billion USD. Most were costs due to older debts. These are added to sums which travel at light speed on the world’s communication networks. Between 1990 and 1997, developing countries paid more as a service for older debts than they paid for new loans, tallying 77 billion USD. Two decades of applying structural adjustments not only resulted in crisis but also deepened it, bringing suffering to millions of people and deepening the gap between the rich and the poor.
Since 1990, after the collapse of the soviet system, a new area joins this carousel, with huge reserves and stocks, with overdue industries and non-performing agricultural systems. Their geographical position allows them to “play” between the E.U. and the USA, but the promise of abundance is late, “the gauntlet” is more and more difficult, the perspective of falling into the
“third world” comes closer and closer. Differential, according to traditions, connections, image….”The UN Development Program” notes in its “Report regarding the development of mankind – from 1999 that 50 of the 100 largest economies are lead by multinational corporations.” Mitsubishi is larger than Saudi Arabia; General Motors is bigger than Greece, Norway or South Africa. The annual income of the top 200 corporations is bigger than that of 182 nations which have 80% of the world’s population. Companies may duel globally now. The easiest means to get rid of a competitor is to buy him. The explosion of acquisitions made in the last few years shows a rapid change in the nature of the global economy, especially the need to relax and reduce regulations regarding foreign investments and international capital flows. The idea that competition is good “by itself and from within itself” is the dominant current of the classical neo-liberal economic model. It has launched a global campaign towards the privatization of state enterprises. Neo-liberals argue that governments are bureaucratic, inefficient and waste contributors’ money so their power must be diminished. Especially where they have interest, a market with a solvable demand, usually from third world countries. In their own countries, oligopolies make agreements with the state regarding global affairs: NASA, local wars and democratic reconstruction, space industry, information technology, etc.
This “history” of the phenomenon shows us that globalization is not something uncommon.
It’s just a matter of force application, on democratic principles, using the technical means of this time.