Periodization of globalization

Periodizing globalization requires methodological choices. From the political and economic point of view the European nineteenth century was exceptional for its post-1815 relatively peaceful development⁴ and very high international trade dynamics that was abruptly ended by WWI. It was a century of further

4 In the nineteenth century there was the Crimean War (1853–1856, that de facto ended the Vienna Settlement) and other minor military confl icts in Northern Italy and Germany.

Both insurrections in the Russian controlled part of Poland had a local character. Despite the heavy loss of life on both sides in the Crimean War the post-1815 century was peaceful; bat-tlefi eld deaths as a proportion of Europe’s population were seven times smaller than was the case in the seventeenth century [Findlay & O’Rourke 2007, p. 378].

Figure 1.1. Major episodes of globalization and the reentry of four Central European countries (CE-4: Czechoslovakia, Hungary, Poland and Ukraine)

Source: based on: [Maddison 2007; Maddison Database http://www.ggdc.net/maddison/Maddison.htm]

0 50 100 150 200 250

1870

Entry of North America and peripheral Europe

1950 Entry of Japan

1990 Reentry of CE-4

2000 Entry of China

and India

%

Population of integrating economies

as a ratio of population in advanced economies GDP per capita gap between integrating and advanced economies

trial development and applied innovations in various domains of life. Th e indus-trial revolution that began in the UK was taken up in the continent: in France, Belgium, Scandinavia and in particular in Germany [Zank 1998, pp. 102–106].

It was also shared by the US, Canada, and also Australia and New Zealand. In Asia, aft er 1853–1858, Japan had to liberalize its foreign trade relations [Findlay

& O’Rourke 2007, p. 401]. It began to follow the Western industrialization pat-tern based mainly on the German and British experience.

Th e nineteenth century marked the beginning of North-South divisions and the economic and political global supremacy of the UK. British and European supremacy was based on two major pillars, namely the sound legal systems and development of a fi nancial system able to properly allocate funds. It has been stressed that the necessary condition for nineteenth century European relative prosperity and development was the political equilibrium established in 1815 based on “a mutual consensus on norms and rules, respect for law, and overall balance among various actors in terms of rights, security, status, claims, duties and satisfactions rather than power” [Findlay & O’Rourke 2007, p. 378]. It was also a century of British and British off shoots domination, and of a few big Euro-pean colonial powers, and of strengthening of economic, social and institutional foundations of modern capitalist states in which Poland and other Central Euro-pean countries did not participate as independent entities. Th ese trends were well refl ected in gross domestic product (GDP) divergence that emerged at that time (see Table 1.2). Great Britain and British off shoots⁵ proved themselves to develop the fastest; their economies and institutions enabled the GDP per capita gap to increase in respect to all other regions (Table 1.2). Table 1.2 also shows the scale of the GDP gap dividing Eastern Europe from the best performers at that time.

Poland, Hungary and Czechoslovakia re-emerged as independent states in 1918 and enjoyed their new status until WWII. Aft er the War they found them-selves in the Soviet Union zone of interests and consequently until 1989/1990 could not benefi t fully from free trade and capital relations. Th us, in the course

5 Th ey benefi ted not only from the then globalization. Great Britain in particular took advantage of its superior position over her colonies and exploited them.

Table 1.2. GDP per capita in 1820 and 1913 (in 1990 Int.$)

Region 1820 1913

British off shoots 1,202 5,233

Western Europe 1,204 3,458

Eastern Europe 683 1,695

Asia excl. Japan 577 658

World 667 1,525

Source: [Findlay & O’Rourke 2007, p. 415].

of the twentieth century the gap was maintained and even widened due to two European wars and the subsequent geopolitical situation, that in fact, for over forty years separated Central European countries from the global economy (see:

Chapter 4).

Th e post-WWII pace of globalization evolved within a new institutional con-text. Th e main elements of the institutional framework of globalization were the United Nations (UN), International Monetary Fund (IMF) and World Bank (WB), and the General Agreement on Trade and Tariff s (GATT)⁶ which was replaced in 1995 by the World Trade Organization (WTO). A key role was played by the gold-foreign exchange standard with the American dollar as its core. Th is system was designed and negotiated in Bretton Woods and implemented in 1947. Un-til its collapse in 1971 it served as an important stabilizer of exchange rates and thus trade and capital fl ows.

Post-WWII re-globalization was highly diversifi ed due to deep political and ideological divisions.⁷ Th ese faded with the end of Cold War and the pace of globalization speeded up in the 1980s. Th is was triggered by both technological advancements and institutional developments in the EU (launching the idea of the Single European Market (SEM)). Th e positive West European integration experience inspired non-European countries to seek deeper trade and economic regional integration.⁸ Th us the process of globalization was accompanied by a parallel tendency for regionalization (regional integration agreements – RIA) with the most prominent examples of RIAs being: North American Free Trade Area⁹ (NAFTA, est. in 1994), Southern Common Market (MERCOSUR, es-tablished in 1991), the Association of Southeast Asian Nations (ASEAN, est.

in 1967) and the Economic Community of West African States (ECOWAS, est.

in 1975).

6 Originally establishment of the International Trade Organization was negotiated and its charter was approved in 1948. When the US Senate was not ready to ratify it, GATT, being a less comprehensive book of rules, became the framework for international trade negotiations until 1995.

7 Contemporary EU predecessors were the European Coal and Steel Community (est. in 1951) transformed in 1957 into the European Economic Community (EEC). Parallel to the EEC the European Free Trade Area was established. Originally its members were not inter-ested in deeper integration and reduced their goal to the creation of a free trade area. Step by step the EEC membership become more attractive and consecutive EFTA countries joined the EEC (the UK, Denmark and Portugal) and the EU (Austria, Finland and Sweden).

8 In 1949 the Council for Mutual Economic Assistance (COMECON) was established in Central and Eastern Europe with the Soviet Union playing a key economic and political role.

For years the COMECON sealed its members within a RIA that eff ectively reduced they par-ticipation in the global economy.

9 Th e NAFTA agreement was preceded by the Canada-US Free Trade Agreement ( CUSTA, signed in 1989).

From the perspective of economic policy, the entrance of China into global economic relations (Figure 1.1) induced real economy supply and demand side consequences. Consequently, they also contributed to global fi nance develop-ments. One of the most distinguished general results of globalization described herein is a reduction in the actual ability of a nation state to infl uence the eco-nomic (see Section 1.4), ecological, social, and cultural processes within its ter-ritory. At fi rst, globalization brought hopes of expanding the range of choice for customers, as well as of higher and more stable economic growth. Th e reduction of the state’s infl uence on its economy and the re-emergence of market mecha-nisms that accompanied it, seemed to create the grounds for the reduced discre-tionary power of bureaucracy.

Th e prerequisites for globalization processes to take place have been peace, transport network safety, access to resources, and a free fl ow of goods and capital.

It is well worth noticing that this set of necessary conditions does not uncondition-ally involve a free fl ow of the workforce for at least two fundamental reasons: sig-nifi cant diff erences in the achieved level of affl uence between particular countries, as well as diff erent levels and models of social security systems [Żukowski 2006].

1.1.3. Liberalism as a foundation of the contemporary