Globalization, as a concept, refers both to the "shrinking" of the world and the increased consciousness of the world as a whole. It is a term used to describe the changes in societies and the world economy that are the result of dramatically increased cross-border trade, investment, and cultural exchange. The processes and actions to which the concept of globalization now refers have been proceeding, with some interruptions, for many centuries, but only in relatively recent times has globalization become a main focus of discussion. The current or recently-past epoch of globalization has been dominated by the nation-state, national economies, and national cultural identities. The new form of globalization is an interconnected world and global mass culture, often referred to as a "global village."
In specifically economic contexts, globalization is often used in characterizing processes underway in the areas of financial markets, production, and investment. Even more narrowly, the term is used to refer almost exclusively to the effects of trade, particularly trade liberalization or "free trade."
Between 1910 and 1950, a series of political and economic upheavals dramatically reduced the volume and importance of international trade flows. Globalization trends reversed beginning with World War I and continuing until the end of World War II, when the Bretton Woods institutions were created (that is, the International Monetary Fund, or IMF, World Bank, and the General Agreement on Tariffs and Trade, later re-organized into the World Trade Organization, or WTO). In the post-World War II environment, fostered by international economic institutions and rebuilding programs, international trade and investment dramatically expanded. By the 1970s, the effects of the flow of trade and investment became increasingly visible, both in terms of the benefits and the disruptive effects.
As with all human endeavors, globalization processes are strongly affected by the values and motivation of the people involved in the process. In theory, globalization should benefit all people because it can produce greater overall economic value. Achieving an equitable distribution of the added value, however, would require the people who dominate the market to embody the virtue of sacrificing themselves to serve the higher purpose of the good of all. However, the legacy of colonialism, which causes a lingering arrogance among the powers in the Group of Eight and creates suspicion in the developing world, means that for many people, globalization is feared and resisted as a negative. Corporatist culture is seen as trampling upon local values and local economies. The Western, secular value system of the major economic actors is seen as a neo-colonial affront to people with non-Western religious and cultural values.
Thus, resistance to globalization is growing in many places, manifesting in the early twenty-first century with rise of Islamic terrorism. That al-Qaeda's target on September 11, 2001, was New York City's World Trade Center was no coincidence.
To be successful, the leaders of the globalization process need to practice the virtues of respect for religious and cultural values, and sacrifice their economic self-interest for the benefit of people suffering poverty and want. It is a challenge whose resolution requires world leaders to pay heed to the religious and cultural dimensions of life and to develop a global world view that lifts up the shared values of all cultures.
History of globalization
The term globalization was apparently first published in a 1962 article in Spectator magazine, but it began to enter everyday English usage after the 1962 publication of Marshall McLuhan's Gutenberg Galaxy. "Globalism" is an even more recent term and appeared for the first time in the 1986 second edition of the Oxford English Dictionary.
Globalization has both technical and political meanings. As such, different groups will have different histories of "globalization." In general use within the field of economics and political economy, globalization is a history of increasing trade between nations based on stable institutions that allow individuals and organizations in different nations to exchange goods with minimal friction.
The term "liberalization" came to mean the combination of laissez-faire economic theory with the removal of barriers to the movement of goods. This led to the increasing specialization of nations in exports, and the pressure to end protective tariffs and other barriers to trade.
There were several eras of intense cross-cultural encounters in pre-modern times (pre-1500 C.E.). The first important era to mention here is the time of the Roman and Han empires. This is the era of the ancient silk-road, roughly 200 B.C.E. to 400 C.E. The consolidation of large imperial states pacified enough of Eurasia that trading networks could safely link the extreme ends of the landmass. Nomadic peoples played an especially prominent role in the economy of the silk roads, since they both consumed the finished products of settled lands and transported them to other customers. So long as the silk roads remained active, they facilitated not only the exchange of trade goods but also the communication of cultural and religious traditions throughout much of the Eastern Hemisphere. This era came to an end with the collapse of the Roman and Han empires, which had anchored and sustained much of the interregional commerce in goods and ideas, and with the outbreak of devastating epidemic diseases that disrupted societies and economies throughout Eurasia.
Beginning about the sixth century, however, a revival of long-distance trade underwrote a second round of intense cross-cultural encounters. The revival of cross-cultural dealings depended again on the foundation of large imperial states, such as the Tang, Abbasid, and Carolingian empires, which pacified vast stretches of Eurasia and gained the cooperation of nomadic peoples who provided transportation links between settled regions. But, long-distance trade in the sixth century benefited also from much more frequent use of sea lanes across the Indian Ocean. Merchants once again linked the Eurasian landmass, while impressive numbers of missionaries and pilgrims traveled in their company. In an era often labeled a dark age-quite inappropriately-literacy and religions of salvation (particularly Buddhism, Islam, and early forms of Christianity) extended their influence to most parts of Eurasia.
The development of a consciousness of the world as a whole first came with the conquest of most of Eurasia, the biggest and long the most populous and culturally and technologically advanced continent, by the Mongols in the thirteenth century. Economist Ronald Findlay (2002) argues that:
For the first and only time in history, a single regime presided over the entire length of the overland trade routes linking China and the Near East. This made it possible for merchants and goods to move safely over these vast distances, facilitating the transmissions of ideas and techniques. Since China was substantially ahead of both Islam and the West in the general level of its technology, this flow chiefly benefited the lands at the western ends of the trade routes and beyond.
The first era of globalization, according to Findlay, began with “the unification of the central Eurasian land mass by the Mongol conquests and the reactions this aroused in the sedentary civilizations that they were launched against.” Among other things, it brought awareness to the Europeans of the civilizations of East Asia and a stronger desire to reach them by going around the Islamic world that had for so long stood in between. That, in turn, brought forth the effort to improve naval technology which enabled the European voyages of discovery of the fifteenth and sixteenth centuries. So, instead of being the first, this can rightfully be called the second (and decisive) state on the way to globalization-first Eurasia, then the world.
The unraveling of the Mongol state in China coincided with a phenomenon of much larger impact: the spread of bubonic plague, known in the West as the Black Death, throughout Eurasia. The pacified vast regions that facilitated overland travel throughout the empire made it possible for humans and their animal stock to transport microorganisms across long distances much more efficiently than ever before (Bently 1993). Long-distance trade probably did not disappear completely, but its volume certainly declined precipitously during the late fourteenth century.
The period of the gold standard and liberalization of the nineteenth century is often called "The Second Era of Globalization." Based on the Pax Britannica and the exchange of goods in currencies pegged to specie, this era grew along with industrialization. The theoretical basis was Ricardo's work on comparative advantage and Say's Law of General Equilibrium. In essence, it was argued that nations would trade effectively, and that any temporary disruptions in supply or demand would correct themselves automatically. The institution of the gold standard came in steps in major industrialized nations between approximately 1850 and 1880, though exactly when various nations were truly on the gold standard is a matter of a great deal of contentious debate.
This "Second Era of Globalization" is said to have broken down in stages beginning with the first World War, and then collapsing with the crisis of the gold standard in the late 1920s and early 1930s.
Globalization in the era since World War II has been driven by multilateral Trade Negotiation Rounds, originally under the auspices of GATT and the WTO, which led to a series of agreements to remove restrictions on "free trade." The Uruguay round led to a treaty that created the World Trade Organization, to mediate trade disputes. Other bilateral trade agreements, including sections of Europe's Maastricht Treaty and the North American Free Trade Agreement, have also been signed in pursuit of the goal of reducing tariffs and barriers to trade and investment.
Aspects of Globalization
"Globalization" carries multiple meanings, nuances, and applications. These include:
- The formation of a global village through closer contact between different parts of the world, with increasing possibilities of personal exchange, mutual understanding, and friendship between "world citizens," and creation of a global civilization. The World Bank defines globalization as the “Freedom and ability of individuals and firms to initiate voluntary economic transactions with residents of other countries.” Marshall McLuhan's idea of "the global village," was introduced in his book Explorations in Communication (1960). The United Nations has coined the term “Our Global Neighborhood” to describe an emerging world-political context.
- Globalization Theory aims to understand complex connectivity proliferating at the global level considering both its sources and its implications across the various spheres of social existence.
- In political science and international relations, the current unit of analysis as the nation state. Globalization has brought forth supranational organizations and international regimes, that is, commonly accepted laws and commonly accepted practices. The loss of sovereignty by the nation state to transnational and supranational organizations is of greatest concern. A world system perspective is a world with a common political system (with a common social and cultural system), linked by a common language, cultural practices, and institutions.
- In sociology and communications, globalization is understood as global mass culture dominated by the modern means of cultural production (movies, television, the Internet, mass advertising, and so on). Mass communication produces images that cross and re-cross linguistic frontiers more rapidly and easily than goods and services, and speaks across languages in an immediate way. Global mass culture is dominated by the ways in which the visual and graphic arts have entered directly into the reconstitution of popular life, of entertainment, and of leisure with the image, imagery, and styles of mass advertising. This is dominated by Western cultural values and techniques. This process is homogenizing but also enormously absorptive of techniques and practices.
- Economic globalization refers to free trade and increasing relations among members of an industry in different parts of the world (globalization of an industry), with a corresponding erosion of national sovereignty in the economic sphere. The IMF defines globalization as “the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, freer international capital flows, and more rapid and widespread diffusion of technology” (IMF, World Economic Outlook, May 1997).
- The negative effects of for-profit multinational corporations are exerted through such actions as the use of substantial and sophisticated legal and financial means to circumvent the bounds of local laws and standards, in order to leverage the labor and services of unequally-developed regions against each other.
- The spread of capitalism from developed to developing nations.
- "The concept of Globalization refers both to the compression of the world and the intensification of consciousness of the world as a whole" (Roland Robertson, 1992).
- "The process by which the world becomes a single place" (Anthony King, 1997).
Globalization shares a number of characteristics with internationalization and is used interchangeably, although some prefer to use globalization to emphasize the erosion of the nation-state or national boundaries.
Globalism, if the concept is reduced to its economic aspects, can be said to contrast with economic nationalism and protectionism. It is related to laissez-faire capitalism and neoliberalism.
Signs of globalization
Although globalization has touched almost every person and locale in today's world, the trend has spread unevenly. It is most concentrated among propertied and professional classes, in the North (industrialized nations), in towns (urban areas), and among younger generations.
Globalization has not displaced deeper social structures in relation to production (capitalism), governance (the state and bureaucratism more generally), community (the notion and communitarianism more generally), and knowledge (rationalism). But, globalization has prompted important changes to certain attributes of capital, the state, the nation, and modern rationality.
Contemporary globalization has had some important positive consequences with respect to cultural regeneration, communications, decentralization of power, economic efficiency, and the range of available products.
But state government policies (pro-market) toward globalization have had many negative consequences in regard to increased ecological degradation, persistent poverty, worsened working conditions, various cultural violence, widened arbitrary inequalities, and deepened democratic deficits.
As such, globalization has become identified with a number of trends, most of which may have developed since World War II. These include greater international movement of commodities, money, information, and people; and the development of technology, organizations, legal systems, and infrastructures to allow this movement. The actual existence of some of these trends is debated.
Trends associated with globalization
- Increase in international trade at a faster rate than the growth in the world economy
- Increase in international flow of capital including foreign direct investment
- Increase in world production and output and consumption
- Greater trans-border data flow, using such technologies as the Internet, communication satellites, and telephones
- The push by many advocates for an international criminal court and international justice movements (see the ICC and ICJ respectively)
- Greater international cultural exchange, for example through the export of Hollywood and Bollywood movies
- Some argue that terrorism has undergone globalization through its use of global financial markets and global communication infrastructure
- Spreading of multiculturalism and increased individual access to cultural diversity, with on the other hand, reduction in diversity through assimilation, hybridization, Westernization, Americanization, or Sinosization of cultures.
- Erosion of national sovereignty and national borders through international agreements leading to organizations like the WTO, OPEC, and EU
- Greater international travel and tourism
- Greater immigration, including illegal immigration
- Development of global telecommunications infrastructure
- Development of global financial systems
- Increase in the share of the world economy controlled by multinational corporations
- Increased role of international organizations such as WTO, UN, IMF that deal with international transactions
- Increase in the number of standards applied globally, for example, copyright laws
Regional economic integration (regionalism)
Economic integration is concerned with the removal of trade barriers or impediments between at least two participating nations and the establishment of cooperation and coordination between them. Economic integration helps steer the world toward globalization. Globalization refers to the growing economic interdependencies of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, as well as through the rapid and widespread diffusion of technology and information.
The following forms of economic integration are often implemented:
- Free Trade Area: Involves country combination, where the member nations remove all trade impediments among themselves but retain their freedom concerning their policy making vis-à-vis non-member countries. The Latin American Free Trade Area, or LAFTA, and the North American Free Trade Agreement, or NAFTA are examples of this form.
- Customs Union: Similar to a free trade area except that member nations must conduct and pursue common external commercial relations such as common tariff policies on imports from non-member nations. The Central American Common Market (CACM) and the Caribbean Community and Common Market (CARICOM) are examples of this form.
- Common Market: A particular customs union that allows not only free trade of products and services but also free mobility of production factors (capital, labor, technology) across national member borders. The Southern Common Market Treaty (MERCOSUR) is an example of this form.
- Economic Union: A particular common market involving the unification of monetary and fiscal policies. Participants introduce a central authority to exercise control over these matters so that member nations virtually become an enlarged single “country” in an economic sense.
- Political Union: Requires the participating nations to become literally one nation in both an economic and political sense. This union involves the establishment of a common parliament and other political institutions.
Along with the above sequence from 1 to 5, the degree of economic integration increases. One form may shift to another over time if all the participating nations agree. For example, the European Union (EU) started as a common market and shifted over the years to an economic union and now to a partially political union.
The above forms reflect economic integration between or among nations within a region. Global economic integration also occurs through “multilateral cooperation” in which participating nations are bound by rules, principles, or responsibilities stipulated in commonly agreed upon agreements. Unlike the preceding five forms that all lead to regional economic integration, multilateral agreements are largely used to promote worldwide economic exchanges. They may be designed to govern general trade, service, and investments (for example, the World Trade Organization), capital flow and financial stability (for example, the World Bank and the International Monetary Fund), or specific areas of trade, such as dealing with particular commodities (for example, the International Coffee Agreement).
International economic integration is propelled by three levels of cooperation: Global, regional, and commodity. Global-level cooperation occurs mainly through international economic agreements or organizations (for example, WTO); regional-level cooperation proceeds through common markets or unions (for example, NAFTA); and commodity-level cooperation proceeds through multilateral commodity cartels or agreements (for example, OPEC).
Barriers to international trade and investment have been considerably lowered since World War II at the multilateral level through international agreements such as the General Agreement on Tariffs and Trade (GATT). Particular initiatives, carried out as a result of GATT and the WTO, for which GATT is the foundation, have included:
- Promotion of free trade
- Of goods: Reduction or elimination of tariffs; construction of free trade zones with small or no tariffs
- Of capital: Reduction or elimination of capital controls
- Reduction, elimination, or harmonization of subsidies for local businesses
- Intellectual Property Restrictions
- Harmonization of intellectual property laws across nations (generally speaking, with more restrictions)
- Supranational recognition of intellectual property restrictions (for example, patents granted by China would be recognized in the U.S.)
Various aspects of globalization are seen as harmful by public-interest activists as well as strong state nationalists. This movement has no unified name. "Anti-globalization" is the media's preferred term. Activists themselves, for example Noam Chomsky, have said that this name is as meaningless as saying the aim of the movement is to globalize justice. Indeed, "the global justice movement" is a common name. Many activists also unite under the slogan "another world is possible," which has given rise to names such as altermondisme in French.
There is a wide variety of different kinds of "anti-globalization." In general, critics claim that the results of globalization have not been what was predicted when the attempt to increase free trade began, and that many institutions involved in the system of globalization have not taken the interests of poorer nations and the working class into account.
Economic arguments by fair trade theorists claim that unrestricted free trade benefits those with more financial leverage (that is, the rich) at the expense of the poor.
Many "anti-globalization" activists see globalization as the promotion of a corporatist agenda, which is intent on constricting the freedoms of individuals in the name of profit. They also claim that increasing autonomy and strength of corporate entities increasingly shapes the political policy of nation-states.
Some "anti-globalization" groups argue that globalization is necessarily imperialistic, that it is one of the driving reasons behind the Iraq War (2003), and that it has forced investment to flow into the United States rather than to developing nations.
Some argue that globalization imposes credit-based economics, resulting in unsustainable growth of debt and debt crises.
Another more conservative camp in opposition to globalization are state-centric nationalists that fear globalization is displacing the role of nations in global politics and point to NGOs as impeding the power of individual nations. Some advocates of this warrant for anti-globalization are Pat Buchanan in the U.S. and Jean-Marie Le Pen in France.
The main opposition is to unfettered globalization (neoliberal; laissez-faire capitalism), guided by governments and what are claimed to be quasi-governments (such as the International Monetary Fund and the World Bank) that are supposedly not held responsible to the populations that they govern and instead respond mostly to the interests of corporations. Many conferences between trade and finance ministers of the core globalizing nations have been met with large, and occasionally violent, protests from opponents of "corporate globalism."
The anti-global movement is very broad, including church groups, national liberation factions, left-wing parties, environmentalists, peasant unionists, anti-racism groups, libertarian socialists, and others. Most are reformist (arguing for a more humane form of capitalism) and a strong minority is revolutionary (arguing for a more humane system than capitalism). Many have decried the lack of unity and direction in the movement, but some, such as Noam Chomsky, have claimed that this lack of centralization may in fact be a strength.
Protests by the global justice movement have now forced high-level international meetings away from the major cities where they used to be held, and off into remote locations where protest is impractical.
Some "anti-globalization" activists object to the fact that the current "globalization" globalizes money and corporations and at the same time refuses to globalize people and unions. This can be seen in the strict immigration controls that exist in nearly all countries and the lack of labor rights in many countries in the developing world.
Supporters of democratic globalization can be labeled pro-globalists. They consider that the second phase of globalization, which was market-oriented, should be completed by a phase of building global political institutions representing the will of world citizens. The difference with other globalists is that they do not define in advance any ideology to orientate this will, which should be left to the free choice of those citizens via a democratic process.
Supporters of free trade point out that economic theories of comparative advantage suggest that free trade leads to a more efficient allocation of resources, with all countries involved in the trade benefiting. In general, they claim that this leads to lower prices, more employment, higher output, and greater consumption opportunities.
Libertarians and other proponents of laissez-faire capitalism say higher degrees of political and economic freedom in the form of democracy and market economies in the developed world produce higher levels of material wealth. They see globalization as the beneficial spread of democracy and market mechanisms.
Critics of the anti-globalization movement argue that it is not elected and as such does not necessarily represent or is not held accountable to a broad spectrum of people. Also, anti-globalization movement uses anecdotal evidence to support its view while worldwide statistics strongly support globalization instead. Statistics show that: The percentage of people in developing countries living below $1 (adjusted for inflation and purchasing power) per day has halved in only 20 years; life expectancy has almost doubled in the developing world since WWII and is starting to close the gap with the developed world, where the improvement has been smaller; child mortality has decreased in every developing region of the world; and income inequality for the world as a whole is diminishing.
Many pro-market (pro-capitalists) are also critical of the World Bank and the IMF, arguing that they are corrupt bureaucracies controlled and financed by states, not corporations. These critics point out that many loans have been given to dictators who never carried out promised reforms, but instead left the common people to pay the debts later. Such corrupted loan partners cause "moral hazard" or hidden detrimental action by the lenders. The pro-capitalists see here an example of too little use of markets, not too much. They also note that some of the resistance to globalization comes from special interest groups with conflicting interests like Western world unions.
Globalization in question
The principle policy concern of globalization is usually put in terms of issues of economic efficiency. Economists tend to judge globalization largely in terms of the gains or losses that it brings to the productive development of scarce world resources. However, many would argue that economic growth should always be secondary to, and in service of, security, justice, and democracy.
On these issues the evaluations have been both positive and negative. In some respects, globalization has promoted increased human security, for example, with disincentives to war, improved means of humanitarian relief, new job creation opportunities, and greater cultural pluralism. However, in other ways globalization has perpetuated or even deepened warfare, environmental degradation, poverty, unemployment, exploitation of workers, and social disintegration. Thus, globalization does not automatically increase or decrease human security. The outcomes are positive or negative depending on the policies that are adopted toward the new geography.
Social justice can be looked at in terms of the distribution of life chances between classes, countries, sexes, races, urban/rural populations, and age groups. The bright side of globalization has in certain cases improved possibilities for young people, poor countries, women, and other subordinate social circles, allowing them to realize their potentials. More negatively, however, globalization has thus far sustained or increased various arbitrary hierarchies in contemporary society. For example, gaps in opportunities have tended to widen during the period of accelerated globalization on class lines as well as between the North (industrialized) and the South (underdeveloped) and the East (current and former communist state socialist countries).
The resultant increases in social injustice can be attributed at least partly to the spread of relations beyond territorial boundaries. The inequities have flowed largely from the policies that have been applied to globalization rather than from globalization per se.
In terms of the impact of globalization on democracy, the positives are through new information and communications technologies and an expansion of civil society. The downside is that there is a lack of mechanisms to ensure that post-sovereign governance is adequately participatory, consultative, transparent, and publicly accountable. Bold intellectual and institutional innovations are needed to refashion democracy for a globalized world.
There is much academic discussion about whether globalization is a real phenomenon or only a myth. Although the term is widespread, many authors argue that the characteristics of the phenomenon have already been seen at other moments in history. Also, many note that those features that make people believe we are in the process of globalization, including the increase in international trade and the greater role of multinational corporations, are not as deeply established as they may appear. The United States' global interventionist policy is also a stumbling point for those that claim globalization has entered a stage of inevitability. Thus, many authors prefer the use of the term internationalization rather than globalization. To put it simply, the role of the state and the importance of nations are greater in internationalization, while globalization in its complete form eliminates nation states. So these authors see that the frontiers of countries, in a broad sense, are far from being dissolved, and therefore this radical globalization process has not yet happened, and probably will not happen, considering that in world history, internationalization never turned into globalization-the European Union and NAFTA have yet to prove their case.
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