History of Globalization, Dispense di Crescita e Globalizzazione

Scarica History of Globalization e più Dispense in PDF di Crescita e Globalizzazione solo su Docsity! Globalization? What are we talking about? Globalization surrounds us: we can see it or not, understand it or not but it exists and affects our lives. It’s difficult to isolate globalization and study it because it is an ongoing process, so we have to look at it from an outside point of view. From a very superficial view, globalization is a quite recent phenomenon from the II WW, but actually this movements/development is not uniform if we see it in relative terms (export/GDP). There was a flat period between the wars, a great fall during the II WW and a not-so-uniform restart, with great booms and flat period. During the last period the globalization is quite flat. Nowadays everything we do we need energy for. The energy consumption during the time is exponentially growing, even though the population growth is not that steep. After 1975, and mostly 2000, the energy consumption growth is decreasing in industrialized and advanced countries, since there is more concern about the environment. The opposite is true for the developing countries because they are concern about other things, such the economic development and the construction of buildings which require a lot of energy. So the situation of globalization is very different in time and space. Globalization is actually a uniform path but inside a complex of things (e.g. energy): we can find out some periods of globalization characterized by some particular features and according to different point of view. The table above is how Williamson divided globalization in 3 phases: A) International trade (the world has progressively become a unified markets) from both the technical and institutional points of view. B) Migration: the idea that migration is a movement not only of people but also of skills, knowledge, institutions… Migration affects both countries which send and receive people. C) Integration of capital markets: it is true that there are no barriers for money or investments, also for immaterial capital (ability to do something). The first real question: did globalization actually integrate the world? Globalization itself creates a unified world but also inequalities between and within countries. Global inequalities have always been rising but nowadays is rising even faster due to globalization. But the inequalities between countries is rising more than inequalities within the countries (levels of society): the world is becoming more and more inequal due to the globalization because globalization integrate economically the world but create more evident the differences between living condition among the countries. There is a dual vision of globalization: an optimistic view and a pessimistic one. Globalization comes from a lot of things and so we have to distinguish facts from opinions. One of the facts is given by the trade boundaries: the history of tariff barriers comes from economics and politics, but it is a fundamental fact of globalization. Globalization, therefore, comes from different perspective: economics, politics but also from the human being. For example mass migration: mass migration is not only movements of people, but also translation of civilization. In the recent year, trade does not only involve selling and buying of goods, but it is mostly a matter of organization and intangible resources. The problem is not moving products, but how to organize all the operations and voyages in order to move quickly, safely and cheaply. Inside the global supply chain, the most important concern are organizations, institutions and flows of information, so the intangible resources (not the tangible movement of things). Capitals and capital markets are something “new”. Financial globalization is very difficult to understand because it is completely immaterial and is not governed but some institution neither national nor international. For example, the crisis in South Korea was not fully understood. How much does people know about globalization? Very few. In fact, people change idea over time according the political situation of the country in the current moment. Globalization is wrongly accepted by people. According to The Economist, globalization creates counter- reactions and is a disruptive force. As the first industrialization created a new industrialized world but it was also disruptive for the old world of men and traditional society, the Economist thinks that the crisis we are in today is the passage towards a new era and a new possible societal organization. So, now is important to study globalization because it is a transaction to a new stage of the world. Globalization as we know it is evolving towards another shape. We can say that the world today is unified, not segmented in pieces not it is segmentable: every country deciding to separate itself from the entire is inevitably going into troubles. For example of Africa (lack of success of the program “Africa for the Africans”), failure of the economic integration of Latin America and Brexit (we will see how it goes). So nowadays, we know that the “old” globalization is almost gone (Slowbalization), and that something else is taking its place, but we haven’t yet understood it, and so we are twice unprepared to face the challenges of the “new” globalization! (1999-2019). Globalization deals with relationship: technology, social conditions and exploitation, mass production, mass consumption and mass migrations, scientific discoveries, human capital… International trade was a leading factor for the globalization process, but it was not the only one! All of these increase population, export, GDP, GDP per capita. Globalization also affected Western Europe more than other countries and the 19th century more than the 20th century. We have to remember 5 possible lines of development: 1) Institutions: period of imperialism, British colonialism; 2) New way of exploitation of regions outside Europe 3) Reinteraction of the expansion abroad in Europe and transformation of some European institutions in order to deal with external expansion; 4) Change in the domestic law: e.g. the modern concept of sovereignty and the modern idea of citizenship. 5) Idea that this European example spread aboard. The graph below shows a sort of summing up of globalization: in red there is the history of global capital movements, in yellow international migration (movement of people) and in blue the exports of goods. There are two different main phases: goods, people and capitals moved synchronically, one pushing the other in the same direction. Actually, the increase in personal wealth begun in UK before the industrial revolution, and along with the commercial revolution of the XVIII Century. Globalization started before the Industrial Revolution. Thinking about the current world: financial crisis in 2008 was a huge shock equally for trade and the international supply chain but not at the same rate until the Trump presidency has charged th international trade with new interests. International trade was a driving force but during the recent year has the reverse role, also in relative terms (export/GDP). Different regions were affected in different ways. At the world level, trade increased after the crisis notwithstanding the very difficult situation in North America and Europe. So, this crisis is a small transaction to something we are not capable to understand yet, it is a great transfer of resources. The transaction economies are the one that will lose the most. The world trade actually increased, also during the ongoing crisis. From an historical point of view, the actual crisis is the worst one. What can we gain by studying the history of globalization? Properly understand globalization (not only superficially describing it) requires a deep digging inside the economic, political, social and cultural past of the world, in order to understand how the whole became greater than the sum of its parts. Even though there are many points of view and interpretations, there is one main certainty: globalization is an ongoing change, it is a dynamic flow, an evolving structure which has remarkably grown mostly in the last centuries. So, a good understanding of globalization is the best precondition to explain how our world is working, and to find out how we can make it working better. Trade and economic theories are not so useful. This statement comes from a conference of United Nation (2017): «As “hyperglobalization” with the help of the very visible hand of the State has recovered its poise, business as usual has set in; the push for “light touch” regulation is under way yet again, and austerity has become the preferred response to “excessively” high levels of public debt. Meanwhile robots, rents and intellectual property rights are taking precedence over the livelihoods of people and their aspirations. History, it seems, has a troubling knack of repeating itself. Unlike the textbook world of pure competition, hyperglobalization has led to a considerable concentration of economic power and wealth in the hands of a remarkably small number of people. This need not necessarily be antithetical to growth». Textbooks about globalization and international economics are missing the points and concentrating the attention on some peculiar aspects and not on the global view, and this is why this approach is wrong. A well- informed reflection started in the year 200 when the International Sociology spoke about the three dimensions of globalization: a. Transference: mobility of factors (goods, capitals, people, knowledge…) across countries. b. Transformation: the movement transforms the factors transferred. c. Transcendence: the outcome is completely outside the tradition. In 2018 the book “Negotiation of the “New World” by Sabine Selchow introduced a new scholarship about globalization. At the social media level, the concept of globalization and the adjective “global” are corrupted and used outside of the proper meaning of the word. On the contrary, at the scientific level, the idea of globalization is used in a proper sense; e.g. it distinguishes the history of globalization that studies the world as a whole and the world history studies the parallel history of each countries and their similarities and differences. Between 2000 and 2018 there are a lot of school of thought, the main three are: 1. Leftist (or the post-Marxian): globalization is considered as only another form of valorisation, distribution and consumption of resources. The Marxian idea is adapted to the globalization framework. Globalization is seen as the final step of the universal expansion of capitalism and it is condemned by the inner contradictions of capitalism (prediction of the crisis, consideration of inequalities as the heart of globalisation…). These contradictions are brought from a national level to the new global level of the economic capitalist evolution of the world. In this sense, this is the reason behind the crisis of every regional trade agreement (NAFTA, Mercosur, UE,…). Harvey spoke about the structural crisis of capitalism inside the globalization movements. There are some new levels, called co-modification of the reality, and the final crisis of capitalism is linked to the modification of some aspect of our life (e.g. Facebook transformed friendships in capital). Harvey found 17 inner contradictions of capitalism development: the real concentration of all the contradiction is fulfilled by globalization because soon there will be no more reality to be co-modified and the capitalism will end. Eric Sheppard showed globalization as a new frontier of possibilities for capitalism that would also bring new limits to glabalization geographically (no more grounds to be commodified) and in qualitative terms (our lives will be limited). 2. Moderate (democratic) view: globalisation is the new face of international order and requires the change of institution to guarantee this order. The most important countries (G20) in the world will be the one to govern the world. So, international order is the key issues and institutions governing the global order are the key problem of the history of globalization studies. 3. Conservative view (Realists): power is the main goal and security is the main concern. Globalization is the form of balance between power and security that each country should achieve to preserve its sovereignty and well-being. The basic assumption of the realists’ view of globalization: We can group all the scholarships into: - Objectivism: reality is defined in its material sense (Realism, Liberalism, Marxism) à globalization needs to be explained as something comprising the whole world and history. - Subjectivism: reality is defined by the way people look at it (Constructivism, Feminism, Critical Theory, Post-colonialism) à the dynamic form of globalization is the sum of people’s points of view, i.e. how they saw and see themselves. ahead. Ships did not depend anymore on the wind, but they were more reliable and they allowed a more predictable scheduled transportation. This helped the long-distance trade to increase volume because it was safer and cheaper and brought to a new level of business. Since this journeys were so predictable and reliable, every root was interlocked with the others and steamships began transporting a lot of people, starting mass migration. This is the current worldwide network of interdependencies, mutual connections among continents. It is global not only for the trade and economics but because it involves all the spheres of human activities: politics, institutions, culture, knowledge… This kind of globalization is global in the sense that it involves all the world, all the humans and all spheres of activities. As we said, globalization started with the British East India Company around the second half of the 1800. History of globalization since that moment has been not linear nor uniform but discontinuous. The last two discontinuity are socio-politically related: the crash of Wall Street (1929) and the economic consequences of the I WW. The first discontinuity (1830) and the second one (1890) can be explained in many ways: - Decline of transport costs: the British colonial model relied very heavily over international oceanic transportation, which is dependent on technology, organization, state interventions… We have two great falls during the 1830s and 1890s: world trade increased as well as European exportations. - The Dutch trade opened new commercial roots but it was actually Great Britain to exploit these new interconnections between Europe and Asia (in 1820, the 50% of the world fleet carrying capacity was British). By the Middle of the 18th century this below was the map of all the possible seaways, mostly exploited by British. Australia was still untouched and unknown. Evolving from the triangular trade, a set of new trade developed linking not only the so-called Golden coast of Africa (where slaves originated) and not only the Caribbean and North America but the entire Eastern coast of Africa and the entire Western coast of America. Goods trade developed also in quality and quantity: new and more products (such as metals) were exported from North America to Europe. The other side of the triangular trade was slave trade from Africa to America, which was the most profitable one and so the backbone for the expansion of Britain. After the first pioneer phase, a more structural approach supported the British expansion overseas. How was Great Britain so able to succeed in such a changing environment? It was because a very strategic thinking and planning was the background of the expansion. A new scientific approach to navigation was developed: the main problem was defining the longitude, which was a military issue because at that time Great Britain was involved in the Seven Years’ War (1756–1763). John Harrison built and tested a marine chronometer H4, which won the prize offered by the British Parliament to stimulate this type of useful inventions: it is a very precise clock still working today, at the British National Maritime Museum, with an error of less than 3 seconds every year. The availability of the extremely precise H4 solved the problem of longitude and allowed to locate exactly every ship or every point around the globe. This represented the beginning of a new technical phase of globalization. The H4 first practical application was the James Cook's three voyages and discoveries in the Pacific. James Cook was the discoverer of Australia, East Asia… and it was possible thanks to the determination to the longitude. He was the first explorer systematically using the H4 in order to map all the land masses encountered but also the winds and the currents he passed through. James Cook gave start to a season of exploration seeking not only for the discoveries of land masses but also for the geographical and weather patterns useful for commerce (e.g. monsoon, great stable currents in the South Pacitic…). All of these discoveries, met thanks to both the military and the merchant fleet, gave Britain a big advantage in commerce. The building of the British Admiralty was the headquarter of the efforts directed to the British affirmation. It was mainly a political headquarter because the maritime expansion was essentially a political effort. It represented the beginning of globalization as well as all the problems related to globalization involving economics, politics, culture and other interests. Chasing the World: The first “global” steps Globalization started with a new kind of colonialism exploited by the British government, but the whole path has been very complicated. We will remark the evolutive steps of globalization to find out why, who and when coordinated the actions brining to the interconnection of the different parts of the world in order to exploit better the resources. This process was not that peaceful, but a lot of resistances and challenges took place in a lot of countries. For example, in order to chase the British supremacy, the French king increased taxes and fuelled anger and dissatisfaction among the population brining to the French Revolution. That period was chaotic with a lot of new things emerging every time. The starting point is that this British success was clear also for the contemporises London became one of the greatest and most modern centre in Europe. Under the surface of the urban modernization of London, there were a lot of economic social changes: the origin of the Lloyd’s of London (1688), the most important insurance and financial company in the world, whch was born in a coffee house. Inside these coffee houses and those small groups of people, a new form of business was born, exactly during the discoveries of James Cook, and Britain were able to exploit the new resources available. The British economy gained every year since the middle of the 18th century, such that American colonists was in deficit with Britain. The unbalanced situation between Britain and the American colonists brought to the American Revolution: America declared the independence and the full legitimacy of the self-standing State. The legitimization of the Declaration of Independence came from themselves, not from God or someone else, and this was very revolutionary. The new USA was the first economically and socially successful example that people well united, well governed with a clear final end could do everything without kings or aristocracy and the old regime staffs that ruled Europe that far. The American example was a mirror reflection of what Europe should be: the Enlightment theories of Locke, Montesquieu and Cesare Beccaria stressed the same thing of the Declaration of Independence. This because the US Constitutions were not only theoretical statements but the real formation of a new and united country. The American Revolution created a procedural background for the French Revolution (1789). The situation in France was different from the American one: First and Second Estates (Church and Nobility) were free of taxes and duties whereas the Third Estate (common people) was the most numerous group but still the excluded from the wealth coming from modernity. The French colonists rebelled as well: Revolutions of the Caribbean and Haiti. The French example became a model of Revolution also outside the French boundaries. In the Spanish Empire, the Portuguese Empire… The 4th phase of Revolution took place in Central and South America led by Simon Bolivar. Bolivar (el Libertador) was able not only to military defeat the Spanish army but also to inspire people to build a new culture for Latin American independence. Bolivar's idea of a powerful and united Hispanic America was doomed since the beginning. He was very aware of the British Enlightment, so the great vision that led him was the creation of a great federation of states in Latin America, exactly like USA. Bolivar was less effective in achieving this because he died of tuberculosis and because the structure of Latin America was more complicate than the North. It was formed by both locals and Europeans (Spanish and Portuguese citizens); the latter were only the 23% but still they were the higher class. The majority were the locals and they didn’t want any European-like government form. During the same decades of the revolutions, Great Britain keep on developing society and political structure evolved while the rest of the world was struggling for modernization. Britain exploited the power it gained internally, with the Industrial Revolution and abroad, reorganizing the British Empire. By the middle of the 19th century until the I WW, United Kingdom remained the greatest producer of industrial goods in Europe and the 20% of all industrial products of the whole world were concentrated in UK. comparative advantage (centralization and specialization of economic activities) but also with the development of some competitive advantages. According to Krugman, the increasing returns to scale and competitive advantage drives economic growth, not comparative advantage. Comparative advantage explains the position of each entity inside the evolutionary path but it is the competitive advantage that explains the actual ability to be successful or not in the exploitation of the available resources. For example, the discovery of a simple way to define longitude was an absolute competitive advantage for Great Britain, but at that time Great Britain had also a comparative advantage coming from the Industrial Revolution. So, the British economy was so effective in creating the basis for globalization because they were at the same time able to detain comparative and comparative advantage both domestically and abroad. In this sense, global history is the historical specialization dealing with circulation of ides, knowledge, goods, institutions, people and networks. So, the dynamical structure explaining how this circulation of things happened. Why does global history deal especially with networks? Every network is hierarchically organized: for example, in the electric power or water distribution, the power goes from the main central station to the suburban substation to the different distribution lines to the single buildings to the cable of the devices… (from the bigger to the smaller). Thinking about globalization, every connected system exists because it is hierarchically organized. Being at the centre of the network is not only a question of comparative and competitive advantage, but also of political power and geo-strategic aims. Being at the centre means being the most powerful country with a leading role in every field, politics, economics, culture… In the graph theory, the image itself it's the most important part of the message: picture C is the most connected network among the three. Every level of the hierarchy has some different functions, some different possibilities to move freely outside the network (e.g. the American colonists deciding to move outside the British network). Nowadays we are living inside multiples networks but they are often hidden: for example, the hpothesis of the “global village” describing the globalization and the world as a place living as a nation village, where everyone knows everything of everyone else, mixing sociology, economics, anthropology, politics, media studies. Everyone is connected with the rest of the world. But how? What are the levels and the properties of this network? In the best possible scenario of the global village, three levels interact: the economies tend to work marketization (possibility to buy and sell everything everywhere), policies tend to work liberalization and democratization and culture tends to work universalization. One example of the hierarchical nature of globalization is the internet connection: there are some regions (e.g. UK) which are hyper-connected and other regions (e.g. Serbia) which are poorly connected. This is due to sociotechnical development and the hierarchical order of globalization; UK was able to exploit the connectivity resource whereas Serbia still uses other technologies and have not entered yet the hyper-connectivity age. If Serbia doesn’t innovate (or copy the available innovation), it would be doomed to be more and more backword in connectivity since the rest of the world keeps on evolving. Historically we can see the interaction between hierarchies and networks looking at the geographical distribution of international trade. Places like UK are clearly the centre of the network: during the 19th century UK was the 30% of the world trade while the rest of Europe was 15-20%. UK declined at the beginning of the 20th century while EU and USA start gaining power. For almost the entire 20th century, the centre of the world production is in the USA. A chronology of globalization was made using the way firms and people organize themselves in order to manage the hierarchical nature of the international trade network. We have several periods: 1. Mercantile capitalism and colonialism (1500-1800): exploitation of natural resources and agriculture of colonies (e.g. East India Company). 2. Entrepreneurial and financial capitalism (1800-75 = Napoleonic years – II Industrial Revolution): control of physical transportation networks of steamships over the oceans and railways constructions over the continents. 3. International capitalism (1875-1945 = II Industrial Revolution – end of II WW): growth of the American business style, e.g. Fordism, trust companies and cartels. 4. Multi-national capitalism (1945-60): extreme American domination of FDI (Marshall Plan, Breton Woods institutions…) 5. Globalization capitalism (1960-90): shift from resourced-based and market-seeking system to optimization of production and profit. The international development is split in two sides: the market of raw materials (oil, coal, iron…) and the high growth in Japan of the new industries of electronics. Networks and hierarchies are also the developments of corrections inside the system. The International Non-Governmental Organizations (Red Cross, World Council of Churches…) are an important counterbalance of the government powers all around the world since the beginning of our history. The spread of liberal democratic institutions is also very important for globalization since they recognize some international organization, for example the United Nations, which can help countries to interact. The most important properties of this hyper-connected system are the interconnectedness (possibility to interconnect everything, firms, economies, markets, interests…) and the globalizability, which is the maximum of the possible interconnection. Globalizability depends on the technology so it’s a qualitative measure of the theoretical limits of interconnectedness given the available organizations and technology in a period and in a region. One example of the evolution of connectivity is the internet timeline, which, by the time, developed to adapt to the time and to bring new functions to the users. The outcomes of two divergences: the Big Divergence separate Europe from the rest of the world and the Small Divergence separate most developed European countries and the European periphery. There are two networks (Europe and the rest) interacting but with some fixed structural architecture very difficult to overcome and which defined the path globalization followed over time. The new Aspect of the International System After the end of the Napoleonic wars, we are inside a highly unstable continental Europe and a fast-growing Britain. The Congress of Vienna rearranged the continental situation designing new borders and political entities, which was a little de-globalization inside Europe, but the economic legacy of Napoleon was still strong, and it was a very important feature for the successful development of the Congress of Vienna. Technology was very important at that time and during those years important milestones of technology were invested, mostly related with the three pillars of the industrial revolution: cotton, iron and steam engine. In the 1854 the first cotton mill opened in India: industrialization was so widespread that it became the dominating dynamic during that period. The British industrial system became a model but also a challenge for all European countries, especially from the political point of view and countries aspiring to improve their living condition and to foster the modernization. Politics was very important in the economic development since the latter required the State intervention, for example for dealing with problems with infrastructures (buildings, transportation…). In UK, state intervention is not direct as it was in the Napoleonic Empire, but it was equally pervasive because setting standards means setting the fundamental to every possible future development. The industrial supremacy of Great Britain was due to cotton, iron and steam engine. The unique feature of the steam engine invented by James Watt was the easiness of the transformation of the rotative movement of the steam engine into the rotative movement of the industry, and this is what made English industrialization better. This rotative engines might be used for several tasks but also for vehicles (trains and steamships) without changing the rest of the technology because the rotative motion was the same of the water mills and a lot of engines already moving machineries. So, it was easily adapted to the machineries, and this explain the success of Watt’s engine and its fast diffusion. The “mechanization” of energy helped to complete the transaction of the English industry. We have to extract two ideas: - The refined version of the British colonization (the original one was the one leaded by the Admiralty, with the use of the H4…) dealing with the business, infrastructure, the construction of a long range vision of the British presence abroad (especially in India), attracted a lot of attention and imitation from other countries (e.g. France, Belgium); - The British modernization triggered a lot of imitation effect inside Europe; the industrial system, the openness to international trade was something very easy to imitate and important for some backword areas – e.g. Germany and Italy – that used the British example in order to gain the first step of modernization: national unification. The Networked Globalization The Industrial Revolution was the most important event since the birth of agriculture and humankind. At small scale (inside UK, inside Europe) many business people became very wealthy while some industrial workers especially children worked in bad conditions and in crowded and polluted cities. At large scale, few countries became more industrialized and powerful while other nations were left behind and became dependent on the powerful European nation. The British example was the first one, where innovation was surely the first pillar for triggering the entire development of the British industry. The great boom of production created a network of exchange pushing both import (of raw materials) and export (of final products) This leadership position of UK was a dangerous change of the order inside a very fragile equilibrium in Europe at that time, due to the previous Napoleonic period. So, the British example was followed by a second way of industrialization in regions where natural resources were available more less in the same shape as the British ones (coal mines near iron deposits…) so where there was the possibility to start an industrialization similar to the British one, based on iron, cotton imported and steam power. All of these technologies were available and easily imported from England. The expansion of British industrialization in the continental markets put under pressure the less industrialized activities which feared to remain backword. During the decades after the defeat of Napoleon, the British manufacture goods invaded the markets (Napoleonic legacy – proactive attitude to export coming from the British industrial development) and this speeded up the countries’ modernization. The first wave in the 30s-40s interested Belgium and Northern France and was very similar to the England model. The second wave, in the middle of 18th, involved Germany Confederation and the Hapsburg empire and then Italy, Switzerland and Denmark which began to unify and industrialize to catch up the British industrialization. A new and stronger core-periphery scheme was at work: the leading country became more and more powerful; the periphery became more and more independent, but the semi-periphery reacted accelerating the industrialization in different ways (Belgium and France, German and the others…). This British superiority was a by-product of an unstable framework of the British industrial revolution. The commercial balance of UK was always in deficit: moving from agriculture and traditional order towards industry and a new economic order, UK was unable to make export grow as much as import. The difference is in the internal market because UK imported raw materials but also other goods; consumption raised a lot, more than export. UK was able to balance the balance of payments thanks to the export of services: maritime transportation, financial, banking and insurance services and the dividends coming from the colonies. So the balance of payment of UK was mainly based in services and investments, not on goods. The British system was able to impose itself in all over the world during the entire 18th century. This paved the way to a new position for the British political supremacy: it allowed the British financial system to export capitals not only inside the Empire but also in other regions, e.g. in Latin America. These regions linked to the UK not through political or institutional links but through a new financial network, projecting abroad not industry or technology but the superiority of dealing with the new kind of financial business and financial services (e.g. steamship navigation, patents…). The new factory system changed the entire human and natural landscape, and not only the economic sphere of social life. In France, by the 1870, while handlooms in UK were disappeared, the census registered 200 thousands of handlooms still working along with 80 thousands of power looms; this was because inside the French productive system, the quality and the final product needed to have a direct control of spinning and weaving activities in order to produce high-level of clothing. The highest quality could be reached only by hand-looming. This is why clothing industry remained a craftmanship in France, while it was completely mechanized in UK. In the continent, distances matter more than in UK and some means of transport like canals were less important than UK while railroads were the most important means. Railroads were not only a matter of trucks and trains but the building a new market for all machinery and metal-making industries. The necessity to have a longer and more networked web of railroads fostered the growth of the heavy industry much more than in UK. The first railroad industrialization in the continent designed a new picture of the periphery structure inside the European economy: - The core is England, Northern France, Belgium, Ruhr Valley (Germany) and the actual Czech Republic; - The semi-periphery is the Baltic Sea and the Mediterranean and Eastern Europe. - The periphery is the rest of the world connected to Europe by steamships and linear shipping. Industrialization is seen as a “pacific conquest”, a small flow of innovation from Northern England towards the rest of Europe. But this flow of innovation didn’t remain unchallenged. A German Official wrote that Germany will not reach the same level of British industrialization due to the different endowment of resource, and this was actually the main problem. In fact, the British technology and style of production and success derived from their availability of resources and the socio-institutional framework; e.g. in the UK a lot of poor workers were employed with no rights, low wages and no rules about production while in Europe new laws protecting female, child and night workers were enacted. So, the British flexibility could not be imported in Europe. Moreover, the availability of British material resources was peculiar; e.g. the chemical composition of British coal was peculiar while the continental coal was difference and must be adapted to the steam engine imported, the same was for the iron. So, the continental industrialization was structurally very similar to the British one but not technologically. This created another source of inequalities among Europe. By the middle of the century, the countries able to catch up the British example were also able to jump inside the centre of the economic and political elite ate the world level. The others remained poorer and excluded of the global redistribution of resources. Outside Europe, the situation was even more difficult. In the USA, the different handicaps that needed to be overcome, e.g. the great distance separating sericulture regions from the ports from the exportation of the raw materials, blocked the economic development if the central USA. On the other side, this was also a new kind of opportunity that helped the economic development: the distance was solved by building a net of railroads. The construction of new railroads and the advent of steamships modernized the entire production system so that agriculture could finally enter the dynamic market. Americans were now able to efficiently move goods at low costs to Europe and sell them at lower prices. Inside the USA the increase in the national product was very fast. The availability of lands and raw materials was greater than every other part of the world so that America became a huge crop of fields. The availability of cheaper and a huge quantity of natural resources, of an efficient internal transportation and steamships in America during the years of the European transaction from agriculture to industrial when a lot of resources were needed, was a magic moment for Americans. This marked a new step into globalization and the beginning of the Second Industrial Revolution. The centralization of power and authority gave the possibility to monopolize the military power but also to redirect the commercial networks. The geographical setting of the Indo-Pacific region make it become a natural way of communications: in fact, it was traditionally encompassed by sailors, trading people, fleets of commercial enterprises because it linked Eastern Africa, the Persian Gulf, Indonesia, all Indian costs towards Southern China. The economic setting introduced by the Europeans, this network of interconnections, let them take advantage of all the existing possibilities overcoming the old system of production and substituting the whole system of interchange with the new one based on steamships and new commercial and colonial outposts created all around the regions. All the existing opportunities were channelled towards the satisfaction of European needs: exploit the resources and export them to Europe. In 1805, India was divided into several semi-independent political units and Europeans controlled only some little point on the coasts. So, the European presence was little at first but, after only 50 years, all Indian regions from Pakistan to Bangladesh were transformed and became part of the greater than the GDP. For these reasons, between 1870 and 1914 British trade grew faster than income. These invisible transfers of capitals created wealth as well as trade. This was called the “age of progress”: - From the sail ship to the transatlantic liner; - From the stagecoach to the railways; - From the darkness to the gas-lighted cities. The most striking evidence of progress is the increase in speed thanks to steam and electricity. This optimism is involving all sphere of life. Railways expanded all over Europe and especially outside UK. Railways were very important in Northern America. Northern America was a very backword part of the world: the central space was wild but in 50 years USA expanded and became a transcontinental power with a more important industrial sector and the wealthiest country in the world. Chicago and Minneapolis became a world level productive centre thanks to the development of railways connections. The vast North America frontier offered the conditions where settlers could develop new ways of life and ideas and transform the inhabited lands into the most extended farmland all around the world. The positivism idea of progress accompanied the settlers in order to conquer and bring the progress to the West. But the same technology produced a different effect due to a different culture and structure of society. Indian imperial railways were built by British people and managed as the British system; the factor productivity in India increased but the freight rates declined. From England to the rest of the world industrialization produced 4 main consequences: 1. Working condition 2. Social classes 3. Size of cities 4. Living conditions This wave of globalization made everyone inside the same system even though not at the same level: there was a convergence in industrialization but still the inequal distribution of the gains. For example, in Southern America industrialization failed or started too late in order to catch up the European model. While in Oceania the transfer of population, culture and institution allowed the successful imitation of the British industrial and modern system. During this phase, also the transfer of culture and institutions was a driver for globalization because one of the actions of positivism was the inventions of the social science. Sociology and anthropology were sciences dealing with the necessity to find new rules to govern more efficiently the non-European people and stabilize the new multinational and multicultural empire and prevent the counter-reaction of the governed people against the European model. The colonization of the world was sustained by the gains coming from colonies. The colonies paid for their unequal insertion inside the global framework. The diffusion of the global externalities Adam Smith advocated laissez faire, the idea that the market, if left alone, would improve everyone’s standard of living and increase wealth and progress. In reality, international trade has never been perfectly free of all government interventions but, during the 19th century, the degree of freedom of the international trade was much higher. International trade was an important tool for gaining the power but this thinking emerged and affirmed slowly. For example, the history of Corn Laws in UK. After the Napoleonic wars, food price in UK fell dramatically and to avoid the consequences the landowners, who dominated the Parliament, got a legislation, the Corn Laws, that imposed fees to discourage the importation of grains. This benefited landowners but charged the industry with extra costs because higher costs of food brought to higher wages for all the industrial production. So, two great parties confronted: the landowners (for the protection of the domestic food production) and industrialists (more food import would mean more industrial export). Actually, the industrialists won and in 1846 the Corn Laws were repealed, and Great Britain became the first country with a “free trade” logic. After that period exports boomed, and other countries adopted the free trade policy establishing a continental leadership of Europe, North America and Japan over global trade. North America and Japan between the 1830 and 1913 gained the 12% of the world trade, while Europe remained more or less the same (60-70%) but the value of trade increased a lot during 1800-1900, so it was the real driver of the international trade. Germany and Belgium emerged in the second half of the 19th century. In per capita terms, the situation was different. Avery important country was Switzerland, a country with no direct access to the oceanic roots but with high specialized sectors: the organization and the ability to expand were the successful factors for Switzerland. The rates of growth differed among countries, but the fluctuations were uniform: the rhythm of development was quite uniform so that there was a convergence between more developed and less developed countries. Not only the usual commodities were trade but also saltpetre for dynamites, indigo for coloration of cloth, frozen meat from Argentina… The abolition of slave trade and the Corn Laws were both attempts to create free markets to extend the possibility to trade everywhere at the same conditions, because slave trade altered the international competition. Abolition of slavery created more consumers all over the world. UK forced the abolition of slavery also in Spanish and Portuguese empires and brought also to the abolition of slavery in USA leading to the Civil War. Inside Europe, other processes of market happened: 1. The unification of Germany led to the creation of the German Empire create the “Deutschland”, a federal state with local differences but an unified for the economic and institutions. The German unification process started economically, creating the Costume Union which extend the free costume duties area, and then politically, after the integration of the last city states. Luxembourg remained independent. 2. The unification of Italy happened the reverse. First it was military and politically and then it was tried to economically integrate but not that successfully. The most important state was the Kingdom of Piedmont, but it was not so large to impose a model for the Italian new unified state. In both cases, after the unification, there was a unification of the internal market but also an elimination of the external barrier to have access to the international trade. So, in the second half of the 19th century, the new European asset resulted to be simplified: great national markets with low costume barriers started a period of free trade in Europe and abroad. Globalization has increased the importance of economic networks by creating a more interdependent and complex world. The national States increasingly depended on each other’s policy choices in trying to coordinate common policy responses and solve common problems. A lot of countries became more and more similar, some economic symmetries developed. There were similar economic booms and national crisis (e.g. in Vienna in 1873) became similar to global crisis interesting international economics. This process of convergence, called Europeanization, was not spontaneous but forced. The first phase was the progressive colonization, e.g. of the Indo-Pacific region, starting from some ports towards the control more and more territories and countries. The second phase was the opening of markets sometimes by military operations to impose the European system. For example, in China, after the first opening to European traders the empire of China closed its ports and expelled the European traders, and this triggered a military reaction especially from UK. This is the Opium War (1839-42) in China because the main problem was the trade of opium from India to China carried out by British merchants. The problem was mainly the equilibrium around the opium trade since China, an huge and self-sufficient country, needed nothing but opium: export of opium from India to China was as much as the export from China to UK of tea and silk combined. So, to make Chinese market dependent on the importation of something, UK had to force the opening of the Chinese ports, especially Canton. By the Opium Wars, Chinese accepted the free trade of opium. Another example is the Crimean War (1853-56) to control the Crimean Peninsula. A local war between two neighbouring countries but a lot of European countries, especially UK, intervened to force the Russian Empire to open freely all of its ports in the Black Sea to the European trade. The main goal was the control of the cereal production in the Southern Russia and, especially after the abolition of the Corn Law, to exploit the cheaper Russian grain. So, the Crimean war was superficially a war for lands, but it was in truth a war for the control of trade roots and commercial flows. In 1853 also the American fleet of Commodore Perry arrived in Japan and asked for the opening of the ports. Japan was a feudal country governed by a medieval-like pyramid of noblemen, whose primary activity was war. So, a military elite governed a country separated from all commercial revolutions around the world. At the beginning, the mission was peaceful but after the Japanese refusal to open the ports, Perry bombarded the ports forcing their openings. At the eyes of Japanese people, American steamships were monsters and different from any human made thing. Also Perry was depicted as a monster and not-so-human being. It was difficult at first for Japanese people to accept the American superiority but after the empire elite forced Japan to adopt full extremely quick modernization I every field: legislation, production, machines, costumes… The “Meiji restoration” of Japan (Meiji was the dynasty) was striking. Japan adopted: - Western economic and dressing code - Western politics: created its own political empire by invading Korea, Taiwan and other islands. - Western financial institution - European-like governmental organization - German-like military reform The Westernization of Japanese society was so complete that some traditional activities (e.g. textile) modernized very quickly. In 25 years a medieval country turned into a modern country. At the beginning of the 20th century, the main oceanic roots were the actual ones. In relative terms (world openness), the world in 1913 was as globalized as the world in the later 1970. The first global conflict, I WW, interrupted and reversed the ongoing dynamics of globalization. Globalization meets Hyperconnectivity During the second half of the 19th century, the first global interconnection of the world was characterized by: 1. No more unknown lands: more less every region was explored, and resources exploited; 2. New structure for the empires: different institutions and approach to the problems following the British example. 3. Inner conflictuality of the integration. On one side the same technology was available more less all around the world, which resulted in a cheaper, faster and more reliable connectivity, but there were different attitudes to exploit it. European sciences were largely used in order to gain practical advantages. There was a better connectivity, a better possibility to control and larger the rule that country could impose over the subjected territories. One of the largest projects of the British Empire was the great Trigonometrical Survey of India carried out by Sir George Everest. The survey measured all the heights, lands and costs in India and brought to the draw a geographical map of India. Clearly it was a great scientific achievement but also a great tool to govern and modernize India. This rational and geographical approach developed and founded a new science, the commercial geography, not only recording the commercial flows but determining the natural division of international trade among countries. The aim was control: British scientists tried to assign the greatest share to UK, the German scientists to German… So, the science became a field of dispute among nations extended all over the world. This competition produced a lot of useful statistics and material. Also the human-made geography as the railways networks was treated as a natural background to determine the scientifical distribution of trade. The logic of the network interconnection is represented by this graph: the more the connections a node has, the more important it is since it is widely connected. Every network is hierarchically organized using the "hub and spoke" paradigm, a system of connection arranged like a bicycle wheel (Hub = centre + spoke = radius) in which all the traffic moves along spokes connecting the nodes in the periphery with the hub in the centre. The one controlling the hub is controlling the entire network. Networks evolved: new links, new edges, new nodes… So, the role of the hub could change too. For example, in the USA the hubs were the ports in the South but, after the construction of the trans-continental railways the hub became NYC and Los Angeles, connecting the internal with the external market. This continuous process of evolution creates new opportunities and closes old ones. There are a lot of theories about networks. Granovetter’s theory highlights the most important properties of networks. According to Granovetter only some bridges are able to develop new information and especially the weak ties could transfer new and reliable information because hard links are related more with government, command, subordination and something about power and obligation, not about culture and choices. Many strong ties have very strong local cohesions, linking neighbouring nodes, but weak global cohesion, in longer distances. On the contrary, weak ties have weak local cohesion but strong global possibilities of cohesion: you can project to longer distances imagines, ideas, stories and culture… And it is important to understand how this difference between strong and weak ties can shape different kinds of government. Actually, we have 3 webs of governance 1. State system 2. Global markets 3. Civil and uncivil societies. During the first wave of globalization the “State system” level absorbed the other two: the imperial period was when European states developed and enlarged their influence to directly control the 90% of the world, imposing some degree of freedom of global markets and comprising the most part of the civil and uncivil societies inside their structures. For example, education was no more a private institution with religious or local schools but it became a central state- controlled institution, to transmit the idea and the discipline of Europe. Niall Ferguson in the book The Square and the Tower, summarise the application of the network theory in 7 points: 1. No man is an island: no people, no nations… 2. Birds of a feather flock together: people with similar cultures gather. 3. Weak ties are strong: because they are able to evolve and adapt to the changing context. 4. Structure determines virality: the structure determines the spreading out. 5. Networks never sleep: they evolve. 6. Networks network: they tend to globalize. 7. The rich get richer: the one controlling the hub gain more and more control. Another insight might be remarked: the importance of “soft power” over “hard power”. This is a consequence of the importance of weak ties, the one made out by the spread of languages, religions, institutions, ideas… The power controlling the spread of mental schemes also controls the future behaviour of people, e.g. the dressing code and the language spread by Britain. The greater power of the one able to use better the soft power and control people’s thought. The Great Britain’s ability to control the technology and the development of new technology explained its commercial centrality, its techno-industrial superiority, its efficient imperial governance system. The outcomes is the gains of UK from being the global leader and at the centre of all the three networks: global markets, political web of power relations and the socio- cultural leadership, able to export worldwide the British model of behaviour. Outside Britain, the conquest of the West in the USA took the place of was seen as the same as the external expansion of the European states. USA didn’t need any imperial expansion, at least for a long time, because they had an internal colonization. At the end of this period (1870-80) some competitors emerged, and the leadership of Britain was challenged by Germany and USA. Convergence and the limits of the system The Great Depression describes the drop in international prices following the crash of Vienna stock exchange in 1873. It was not the first one during this century but the very first, after the defeat of Napoleon in Waterloo, was normal due to the previous war. The fall in prices forced all producers to adopt new tools to decrease costs, in an attempt to achieve greater levels of efficiency and contain any waste of every kind: raw materials, labour, energy, even time. “Fordism” developed. The crash in Vienna resulted immediately in consequences all over the world. This convergence was man-made: material and immaterial infrastructure gave the possibility to know what happened all around the world and react. Economic convergence is an idea deeply rooted in the new- classical theory of growth: initially regional disparities tend to narrow overtime. Each region moves towards a long-term growth rate in per capita term, called steady-state rate. The measure of convergence is measured in two parts: - Beta convergence: catching up of poor countries with rich countries (national level). - Sigma convergence: evolution of economic disparities in per capita terms (living standards) Both aim to measure the common rush for the control of resources. In 1871, the journalist and explorer Stanley found the lost explorer David Livingstone. In 1878, Leopold II of Belgium sent Stanley, who travelled for 30 years around Africa, to explore and establish trade agreements with leaders in Congo. Leopold II, who had founded the International African Association, actually wanted to gain the build a new Belgium Empire of that area and so he did, beginning the conquest towards central Africa. The world supremacy was a matter to be solved among the Great Powers. In 1912, it was published an atlas of a sort of an imaginary World Chamber of Commerce; it measured the share of each chief commercial country (UK, Germany, USA, France). The idea was that international trade was a measure of countries’ power and the possibility to create a new equilibrium forming an elite club who had the governance of the world. Four dynamics elicited people to think optimistically about the world and so brining to a convergence: 1. Gold Standard At the beginning 19th century, the pounds’ value was linked directly to a fixed amount of gold and the Bank of England was charged to convert paper banknote into gold for every person who asked for the change. And this applied to every country adopting the Gold Standard, in order to make easier and more guaranteed the conversion of pounds into foreign currency. The easy conversion of pounds and dollars unified the currency of the 50% of the planet. 1 ounce of gold = 6 British pounds 1 ounce of gold = 30 US dollars This period was incredible: the management of innovation was very naive because all the management science developed decades after, but it was very effective and ingenuous in dealing with the difficulties. We can count 5 great technological eras: 1. Beginning of the First Industrial Revolution (1750-1820) 2. Development of the First Industrial Revolution (1800-70) 3. Second Industrial Revolution (1850-1940) 4. Mass production (1920-2000) 5. Computers era (1980 - now) The 3rd one, the Second Industrial Revolution, was marked by electricity, chemicals and steel. There was the possibility to transform iron in steels and creating different kinds of steel by adding other materials. The socio technical revolution was a very complicated matter. New technologies coexisted with old technologies before substituting them, creating a hybrid and dynamical picture of society. Giovanni Dosi developed the concepts of technological paradigm and technology trajectory to understand better the different periods of technological development and the fact that every new technology is developed into a new trajectory and so depends on the technological path followed until that time. So every country over time developed a national technological trajectory leading to divergent goals and blocking the full development. For example, technological trajectory of UK remained centred around the steam power while abroad new engines were discovered. We have to adopt a multi-level prospective: at least there are the micro (individual), meso (national) and macro (global) level. The transition of technology from micro to the macro level is possible only through the meso level, with the intervention of Government in economics. Great Britain was the world leading naval power: it led the way in the transition from sail to steam but it then failed the transition to new levels of technology. This is the great contradiction inside the Second Revolution: UK retained a lot of geostrategic power but at the beginning of the 20th century lost the economic leadership of the industrialized world. Countries like Germany and USA gained power inside the new scenario and performed economically better than UK. This broke the former equilibrium. UK retained the political leadership but proved to be more and more unable to maintain the economic leadership to be linked at the frontier of the technological progress. This created uncertainty inside a not-unified Europe and not-unified world. There were a lot of unbalanced relations between Europe and the rest of the world. For example, the Ottoman Empire and Russia were actually Great Powers in the demographic and military aspects, but they were very weak and backword in economics and institutions. These Empires lived side by side with a dynamic Western who was controlling directly and indirectly almost all the world. Also, it was spreading the idea that the available resources were limited and that the possibility for European to control the available resources was about to end, because there was no more land to discover and the available land was a sovereign country or a colony. European economy exercised an almost full control and influence over the entire planet. The only possible dynamic was the inner development of new productions, technologies… For example, in 1900 in Paris there was the celebration of electric lightning of the whole city. Paris and not London was the first one, because the technological improvement was an advantage for the follower countries, not the leader, because the felt more a sense of challenge. The economies in continental Europe grew faster than UK; considering the new technologies such as steel, electricity, and chemicals, Germany became the leader. Plantation of new raw materials for the new chemical industrial were usually found outside the British Empire, e.g. rubber (Indonesia), copper (Chile),… so the follower Germany, Belgium, France, Austria-Hungary, Japan and USA were all more effective in dealing with the new technologies than UK. UK resulted backword also considering the capital market: the more technologies you invest in (differentiation), the more capital efficiency. The evolutionary trajectory must take into consideration that technology is a complicated matter, technologies coexist and interact with the socio-political environment, that can be an advantage for better organized countries or a disadvantage for poorly organized country. The reaching of the limit of the available resources brought to the need to take the available resources from other countries. Globalization at the beginning of the 20th century is a “zero-sum final game”: what I win is as much as you lose. The area between the Ottoman and Russian Empires became even more unstable for the Balkan Wars (1912-13). The age of democracy and progress reached its final stage. UK was the main country to take resources from. In the 1913 two great alliances confronted in Europe: the Triple Alliance (Germany, Austria-Hungary, Italy) and the Triple Entente (Russia, France, UK). The first global war and the following unstable peace settlement In global term, we ca interpret the importance of the I Wold War as the end of the optimism and the idea of self-enforcing everlasting development. At the same time, the Great War was the beginning of the “industrial war” years, because industry, technology, and science played a main role in determining the outcome of the war. When the war ended, the profitable growth stopped and many countries got poor, reconfiguring the political and economic map of Europe as well as its position in the global context. The world at the beginning had 2 faces: 1. Eastern front: traditional war, great battles of cavalry and great movement of armies. 2. Western front: geographically limited but involving many millions soldiers. The war started in Sarajevo with the killing of the archduke Francis Ferdinand of Austria-Hungary, but this was only an occasion. The situation was already unbalanced. The war was the horrifying face of progress: the use of machineries, tools… it was the end of the inner good nature of progress and of optimism. The globality of the war was both in width and in depth: all the imperial structure, Europe and the controlled countries, were involved and each country’s economic structure was totally involved. In fact, countries, e.g. UK, developed “internal fronts”, channel a great economic effort producing more weapons by calling women at work… creating some structure and duties to regulate the female participation in war market. The entire world, not only Europe, was directly or indirectly involved in the war, by actually fighting or sustaining the war by producing of weapons, machineries, cars… The European economic structure there was a huge economic transformation. For example, after only 2 month of fighting, the German position was already unsustainable and, with the American intervention in 1917, Germany lost all hopes of winning. The unbalanced situation was also extremely clear at that time; as the war continued, the Allies power advantage in the industrial resources grew and their winning was finally almost certain. Resources became more important than men (soldiers), and the internal fronts became more and more important. The only problem countries could not overcome was the lack of resources. UK and USA were able to carry out production and overcome all the difficulties (e.g. submarine attacks by Germany, the blockade of transoceanic transport from Europe) mostly thanks to a high availability of resources, which didn’t require to stress the financial sectors. At the end of the war, France and Germany had a high debt. Summing the direct gross cost (more than $ 200 millions) and the indirect costs (debts, material destructions, shipping and cargo losses and human costs), the I WW costed $ 338 millions. The indirect cost of the world was almost as much as the direct costs: it was something unpredictable and unknown at that time. Due to all these losses, the most important industrialized countries’ development jumped back to 10 years earlier. Considering also the losses after the war, e.g. injured people, dead and invalid workers, lost in resources, ships, productive potential..., the previous central countries lost their dominant position in global economy and the self-sustaining growth capacity. The great and widespread dependence on the profitable past experiences was so rooted in the European governments that the policies developed after the war became something in between, curing the emergencies without the necessity to fill the gap and losses created by the war. The idea was to wait for the favourable previous conditions to naturally reappear; this is a fruit coming from the optimism but outside the real after-war conditions. Governments didn’t realize that the previous era was finished and a new approach was needed: this is why occasions and time for development were lost. Russia found itself in a different situation. The Empire of Russia in 1914 was a huge country, the most backword among Great Powers but strong in the aggregate figure due to its dimension (population, available resources...): it was both self-sufficient and able to supple the rest of Europe with cereals, minerals, raw material, cotton… Russia was important for the rest of Europe and so its backwardness was tolerated. Its social structure was very backword with economic and social habits that Europe abandoned one century before. Russian agriculture was an important sector in aggregate term but a failure in per capita term. The I WW stressed this weak social structure, pushed it over the border and crack the weak equilibrium maintained by the alliance of the orthodox Church and the Tsarist Monarchy and this opened the door for the Bolshevik Revolution. The first Revolution of Bolshevik Revolution was in 1905 failed and the second one in 1917 succeeded. The crash of Wall Street in October 1929 derived from a lot of difficulties of that time but also revealed a lot of weaknesses inside the system. The highly efficient American system of production resulted in the “Big Business”, due to - Natural resources - Improved transportation - New immigration (workers) - High tariffs - Dynamic society (encouraged financial risk and business enterprises) - Vertical integration After war, the situation reversed, and this is why Wall Street crashed. Natural resources stopped entering the market, transportation didn’t improve anymore, immigration stopped, no more to integrate vertically and no more dynamic society. High tariff, however, remained. The problem in continental Europe and also for America was the high debt contracted during the war. During the war, USA was the only one net credit country (for $ 6 millions) and invested a lot in Central and South America partially substituting the British intervention. The debts with the Europe was never repaid; Europe was an impoverished continent and was unable to overcome its inner problems to restart. USA economy was then facing - Internal problems: invested a lot in highly risky countries (Europe, Latin America) - External problems: over production, fall in prices of agriculture production and so spread of poverty... - Hyper-investment in the bull market during the 1920s, the lack of control, instability of the market, excess in confidence… All of this caused the collapse of the stock market, a result of the fact that a lot of capitals the market counted on to sustain the growth didn’t exist. The president Hoover depicted in his memories an exceptional picture and so underestimating the unbalance of the situation. The president Coolidge, in charge during the crash, was not able to recognize the real problem causes so the reasons of the crash remained agriculture overproduction and undervaluation of agriculture products, and so the impossibility for the agriculture sector to develop and repaid its investments. Due to this unrealistic image of the American economic system, Government didn’t intervene at that time. Government interpreted the Wall Street crash as a strange and random moment that would disappear spontaneously, but prices of companies shares continued to fall and the crisis got harder. A lot of people moved to the cities in order to find job in industries. The equilibrium between agriculture and industrial state reversed. The American crisis reflected instantaneously in Europe hitting mostly the weakest countries (Germany, Italy and Eastern Europe). The international trade collapsed (negative growth of -0.14%) and the Gold Standard collapsed too. So the 3 dynamics causing the deglobalization were: 1. Collapse of International trade 2. Collapse of technological development 3. Collapse of the old financial system (Gold Standard) The engine that was previously pushing towards globalization disappeared after war. Before the war there was a “conflicting integration” where all the Great powers were trying to overcome each other to exploit resources and invent new technologies to scale the global order rank of economic and political power; after war this didn’t exist anymore since the main actors were no able anymore. At the end, the winners of the de-globalization were USA, Sweden, Japan and Canada while the losers UK and France. De-globalization rebuilt the structure of globalization, putting at the centre of the world countries outside Europe. From the New Deal to the conception of a new multilateral vision of the world The crisis caused two kinds of responses: 1. The New Deal of US President Roosevelt (1933): the practical response, changed completely the relations between government and citizens. 2. The “General Theory” by Keynes (1936): the theoretical response, reversed the thinking about the relationships between production, market and economic growth. The Wall Street crash caused a massive unemployment all around the world: especially in Europe where economy failed to shift towards the new high-profitable sectors, while in USA the capital was sufficiently high to sustain the general economic equilibrium at least. These new sectors were automobiles, durable consumer goods, chemicals, energy, radio, electromechanical industry… The fall in demand in 1929 produced a deep fall in prices and in production starting the vicious circle of low consumption-low production-low income-more unemployment-lower prices… It was a period of surplus of agriculture product and raw materials. The crisis led to the birth of the new thinking and field of studies; for example, the Norwegian economist Ragnar Frisch, the inventor of econometrics, invented the macroeconomics, to explain the causes of Wall Street crash. The most important was the book published in 1936 by Keynes “The General Theory of Employment, Interest and Money”. It was an intellectual revolution because it put at the centre of the analysis the balance between employment and consumption. According to Keynes, employment was determined by 3 factors: 1. Marginal propensity to consume: the income people chose to spend on good and expenses; 2. Marginal efficiency of capital: the rate used to decide whether investments are worthy. 3. Rate of interest: the return of capital invested. The classical view was the one mechanically connecting prices and growth, whereas the Keynesian view the propulsive role was given to the demand, not to the supply/production. So overcoming the crisis is up to consumption, not production. The key of the intellectual revolution is the Keynes multiplier, a virtuous circle. The first move is up to the Government who should increase the public expenditure (getting into debts) to create a surplus of capital. More public expenditure (e.g. in public infrastructures and public works) could lead to more employment and so more aggregate demand, more production, more employment, more economic growth, national wealth and, finally, more taxes to repaid the debts. Keynes presents another important thinking. Capitalism is a cultural construction which is always in need of new ideas and possibilities to adapt itself to changing situation (e.g. crisis). The problem is that culture is conservative and path-dependence: so, capitalism need culture to exist but at the same time culture keeps it from adapting to new ideas. Keynes says that capitalism is multilateral and needs a global thinking: every sectoral approach is doomed to be only partially effective, whereas a global approach would maximize the efficacy. In 1932, the industrial production had fallen a 50% from the 1929 level. By 1933, more than 12 millions of people in USA were unemployed. Roosevelt was the former Governor of NYC and he acted proactively against the crisis, becoming the democratic candidate for presidential elections with a completely new approach to economic problems. Roosevelt’s New Deal of US abandoned the liberalism, the no-intervention of Government in the economy; Roosevelt presented a new direct intervention of Federal Government in economic affairs for both healing the post-crisis situation and building a new idea of nation. He and his message and was very successful; Roosevelt was elected 4 times but died at the beginning of the 4th mandate. This new wave of public intervention in economics healed clearly the situation. The New Deal consisted in reforms to restart the economic growth and new instructions to prevent similar situations in the future. None of these interventions was socialist, even if Roosevelt was accused to be so. The New Deal permanently changed the relationship between the citizens (private economy) and the Government (public economy), becoming a model for all European reconstruction after the II WW. The New Deal was based on the establishment of new specialized public agencies. National Recovery Administration (NRA) was intended to develop codes of conducts, for example regulating wages, working hours, working conditions… This affected more than 22 millions workers bettering their working and living conditions. Securities and Exchange Commission (SEC) was intended to rule and control the financial sector, making the NYC stock exchange a public institution. Agricultural Adjustment Administration (AAA) was intended to subsidize cultivations (e.g. flour, rice, meat, tobacco…) maintaining the farmers’ income and prices high, to avoid overproduction and waste of resources. The AAA collaborated with other agencies, for example transferring production to cities and selling at lower prices to help poor people with a program of food distribution. Tennessee Valley Authority (TVA) was intended coordinate operation and improve condition of the Tennessee River Valley, to transform the Tennessee River into an opportunity and not an environmental problem. Nine dams were built along the Tennessee River and this was very positive because: - Gave employment to people who built them; - Gave electric power regions at low cost (since it was a public infrastructure with no profit aims); - Improved agriculture creating fresh-water repositories for the canals irrigating the soils. Conference in 1919, was now the first delegate of the most capitalistic country UK and, in the picture, he is speaking to socialist countries’ delegates. All the ideological barriers went down to open the possibility of creating a new peaceful world after destruction and bloody fights Bretton Woods conference was a forum of discussion among countries, but it also created 3 institutions, all aimed to stabilize world situation: 1. International Monetary Fund (IMF) It is an institutional substitute for the Gold Standard. Its aim is to secure the world monetary cooperation, stabilize currency exchange and to expand international liquidity and access to hard currencies. 2. World Bank Firstly, it was the International Bank for Reconstruction and Development, who helped the European economy to reconstruct and developed to gain long-term stability. Now it is only a part of the World Bank, which deals with capitals and uses different substitutions to guarantee social and economic development (education, infrastructure, health services…). 3. General Agreement of Tariff and Trae (GATT) It remained uncomplete. There were three rounds of negotiation to reach a final agreement on international trade and to tear the costume barriers down, but they failed. In 1995, the GATT was transformed into the World Trade Organization without this agreement and functioning as a central headquarter for all the commercial disputes. In 1945, in San Francisco the United Nation organization was founded. The terrible situation in Europe got worse after the wold. The United Nation intervened with a specialize agency: the United Nation Relief and Rehabilitation Authority (UNRRA) helped Europe with food, medicines… The convergence between the communist and capitalist world ceased. In 1946, Churchill declared that Europe was divided by an “Iron Curtain” and so the Cold War begun. “Winning the Peace” and the construction of a new level for the international interconnectedness The idea after the war was that healing the wounds of the war was the same as to create global standards, i.e. a set of models of economic and institutional rearrangement to avoid the mistakes made after the I WW and to create a self-supporting condition for a long-lasting setting of peaceful interrelations all over the world. The construction of a new world starting had to be the principal goal. It was a great task since they had to deal with two contrasting roots of problems. The first one was the reconstruction of war destructions, which took the development back in time. The second one was the general backwardness of European economies with respect to the American ones: the lack in productivity, in organization of production, in Fordist way of production…Agriculture in Europe was worse than industry. This time Germany was recognized as the key to all European recovery: the need to speed up the reconstruction of German economy was a political aim to avoid a return of nationalism, of the Nazi nostalgia… and to speed up the recovery of the other European countries since the German market played a big role in the economy as a great importer from other nations. World Bank helped Europe with loans for the reconstruction of damaged infrastructures or the building of new ones, for example for electric power. The GATT helped with the creation of new commercial treaties: in fact, he commercial recovery and the growth of real output after the II WW was faster than after the I WW. But this wave of liberalization was effective mostly inside the developed country: it eased the internal trade among European countries, not caring much about the global network of trade outside Europe. Inside each country the economic recovery went along with the introduction of policies of Keynesian origin, with a more proactive action of the government to accelerate the recovery, and with the adoption of Fordist organization of production in every sector. So it was lie and “Americanizaton” of Europe. There is another effect of the European reconstruction: a redistributive effect. Hard growth is related with the employment and quantity of work in agriculture and industrial production (e.g. creation of new resources). Soft growth is related with the level of employment of resources (e.g. better coordination and use of existing resources). Hard growth favoured peripheral and not-so-centred countries: e.g. Norway was the only one who had a positive hard growth during 1945-60, countries like Finland, Netherlands and Sweden were better than UK and Germany. This redistributive effect favoured a better level of integration enlarging the old inner core of Europe (UK, France, Germany, Netherlands, Belgium) to the Baltic states (Norway, Sweden, Finland) and other Southern countries (Italy, Spain). The choices made in the after war reflected into the social-cultural-institutional conditions of the country: e.g. favouring industry over agriculture and so favouring a movement of labour force out of agriculture and inside industries, the creation of industries very favourable for growth… This brought to the minimum level un unemployment ever. Productivity grew and Europe quickly filled the productivity gap with the USA. Europe and North America became more and more similar. In the 1950-60s all European aligned dynamic flows of development in production as well as capitals market. During the Cold War period, two worlds were acting both confronting themselves and trying to integrate more and more in their block. Both worlds aimed to gain the maximum integration within their regions. Great Britain attempted to be a third world inside the conflict, but it became clear that UK couldn’t play such a role for the ack in all the needed infrastructure (military, economic and technological). After the war, West Germany was occupied by British, French and American troupes (Federal Republic of Germany) and East Germany by Soviet troupes (Democratic Republic of Germany). Germany remained separated for more than 50 years. The most critical point was the city of Berlin, which was divided in 4 zones: the Western power had the 3 Western sectors and URRS had the Eastern sector. In order to feed the cities in West Berlin avoiding any land communication (because the surrounding area was Soviet), America built the Berlin Airlift, a display of both the technical Western superiority and the attractiveness of the mass consumption society. This strange European reconstruction became the background for a new thinking about the world and so the second wave of globalization. The triumph of multilateralism and a program for the recovery of Europe Immediately after the II WW the problem was the destroyed Europe, whereas America was going very well: more than the 50% of world industrial production was in the USA. The war effort produced two effects: destruction for Europe and flourish for America. During the war a lot of hidden resources were employed, so the expansion of the basic production took place notwithstanding the war. One of the new resources that emerged was, for example female workers (“We can do it!”). The end of the war was a matter governed by President Truman, who was previously Roosevelt’s vice president. Truman did not follow Roosevelt’s schemes in the international politics scenario: the division of Europe and the beginning of the Cold War (“no gun was hot/used”). The “Iron Curtain” divided the Eastern and Western Europe. Bretton Woods institutions intervened to heal Europe. The problem was that Europe couldn’t export anything to USA (they already had everything), while USA exported a lot to Europe and so the European trade deficit increased. The imports in the USA were especially raw materials and few manufacture and semi-manufacture goods; only the 20% was from Europe. At the same time Europe imported almost every industrial product from USA, with an expanding deficit over time: the “dollar gap” represents the need the European country had of new dollars to pay USA. Every European country was in deficit in both goods and services. In 1947, the Secretary of State George Marshall during a graduation ceremony at Harvard University took the occasion to present the Marshall Plan. Marshall said that the situation in Europe and the dollar gap affected America too, and so the American government wanted to solve the problem; this created optimism in Europe. Truman, months later, at the US Congress presented the final version of the plan saying: - “The future of our own economy is in jeopardy”: the problem was not only in Europe, but also America would be in danger if Europe don’t solve its problems. - “Austria, France and Italy have nearly exhausted their financial resources”: the problem ws the availability of financial resources sufficient to stand the new multi-lateral economic arrangement all around the world. - “If the western European nations should collapse this winter, as a result of our failure to bridge the gap between their resources and their needs, there would be no chance for them – or for us – to look forward to their economic recovery”: the problem is that the increasing needs during the winter would lead all countries to the collapse, endangering also USA. - “contribution to the freedom and welfare of other nation and other people […] great responsibility goes with great power”: if we want to be a superpower in the world, we need to merge our power with responsibilities, finding out the way to heal the situation in Europe. After all the debates, Truman wrote that everybody, both democratic and republicans, agreed with the plan. Technological innovation were the pillars that enabled developed economies to have the access to new resources and markets. The outcome was a space-time convergence of the world developed economies into one economy, but at the same time the exclusion of non-developed economies. The new transport revolution thanks to mass maritime transportation and air mobility make transport costs dropped and segmented the market. Air shipments accounted for the 6% of the US imports in 1965 but it increased of the 25% in 1998 taking into consideration the value of the imports. The higher value items were transported by planes, leaving the low-value items to the maritime transportation. This segmentation led to the possibilities of new forms of standardisation of transport and of controlling the entire circuit of international trade. Myrdals’ model’s idea is that this new kind of international trade created new forms of regional development inside the process of cumulative causation. It explains the special concentration of industries aiming to self-reinforcing advantages in areas where there is the availability of a wider range of transport possibility (not necessary in a hub). This results in benefits for the surrounding areas increasing demand. The market potential was related to the different shapes of transport systems and the old hub-spoke patters developed: the segmentation of the transport markets created a three-dimensional scheme of hub- spoke, with different levels of transport markets and so different networks in international trade separated by the means of transportation but interlinked by the financial, economic and political aspects. This was because some mass transportation begun to depend on specific roots for the supply of the developed countries. For example, the oil supply had to cross 3 chock points: Hormuz Strait, Suez Canal and Malacca Strait. The one who is in control of these points is controlling the entire network of supply of oil from the producer to consumer. This is why this new mobility system is again dependent also on socio-economic environment, the political landscape. This is the beginning of new kind of economic studies, locational economics, and a new kind of reflections about the economic development at its higher level. Transportation became so important to sustain economic development that became a focus for all of the different levels of actions inside the globalization mechanism: policy, society, economics, finance… The globalisation mechanism developed overtime and needed someone to find new equilibria inside its evolutionary path, i.e. the socio-technical conditions and the geopolitical strategy. Until the 1970s, the two main dynamics, international trade and socio-technical availability of mobility infrastructure, went in parallel but this symmetry broke with the first oil crisis. The first geo-strategic change in the global scenario was the first hard war between Egypt and Israel and the closure of the Suez Canal (1956), one of the chock points of the world oil supply. The effects of the cold war and the massification of the global markets During the Cold War, the technologic capacity was huge because it was the only mean to attack. Each side emphasized the corruption of the opposite and the Cold War became global as some national revolutions were supported by USA or URRS. The mechanism of the Cold War was that one side interpreted the moves of the other side as a threat. One of the threats was the Domino theory by Henry Truman said that USA must contain Russia’s expansion of communist to stop the domino effect, i.e. the fact that every country falling into communist would begin to collapse. Meanwhile, in the USA the growth continued, and the entire Western world was flourishing led by the increase in the world trade during this 2nd wave of globalization: this is called the Golden Age of capitalism. The idea that Eastern Europe separated itself from the rest is not true: East-West trade was much bigger than the West-East trade, so the East frontiers were more open. For example, URRS continued shipping raw materials even during the Cold War. We can distinguish two periods: 1. 1948-51: the Marshall Plan created conditions for reconstruction and development in Europe. 2. 1951: Korean War was the starting point for a global rush for material resources. The war was not global itself; the consequences were global since every country rushed for the accumulation of raw materials in fear of deficiency. This was seen as a new Malthusian crisis in which the world manufacture capacity would be beaten by the undersupply of raw materials, threatening capitalist world with mass unemployment, underdevelopment of production… To avoid this lack of resource, all developed economies regained all their pre-war connections around the world. So the Korean war was a sort of projection abroad of international economy and a substitution of the Marshall Plan in Japan: during this period all industries were restored and Japan fully recovered. The main explanation of the European Golden Age was productivity, which has increased faster than production. All European countries grew but in different terms: UK and Ireland improving their performance but still were undergrown relative to other nations. Technology was the first driving force of the Golden Age, but not like in the past: there were no new technologic powers, new engines, new production systems...The idea that technology needed to be better qualified was challenging. There are 3 theories: 1. Kindleberger’s: the human capital (the abundance of labour supply) was more important than technology itself. 2. Madison’s: the attitude to invest in technology was important and this explains the full exploitation of the existence technology during the 50-60s. 3. Denison’s: there were not great breakthrough during the 50-60s, but there were improvements in the use in existing technologies that overcame the inefficiencies. The different levels of growth among European countries, with some of them leading the way (e.g. Germany, Italy) and other staying behind (e.g. UK, Denmark), is up to the productivity level and the extensive use of non-material, skill- and capital-intensive resources. In 1950 the differences between East and West were greater than in 1938. The Socialist countries had a big task if they wanted to approach the conditions of the West. This situation was intentionally prepared during the war but with the expectations of different results. At the Yalta Conference (1945), the last with Roosevelt, the Grand Alliance powers (USA, URRS, UK) signed the declaration that every defeated country had to join the policy of the Great Power to follow a path towards pacification, economic reconstruction and full restoration of democracy. The Grand Alliance remained military strong during the whole world but diverged in the meaning of economic recovery of the country (capitalist vs communist view) and in the definition of democratic restoration. Winston Churchill was not re-elected at the end of the 1945, USA’s new President was Truman and so, at the Potsdam Conference (1945) the only constant was Stalin, and they decided the division of Europe. The first response of this situation was the creation of a Council of foreign Ministers inside the UN, called Big Five (UK, URRS, China, USA, France) discussing all the matters needing a urgent analysis and instituting the Security Council to control the situation in Europe. The II WW Peace Conference reassessed the borders: all Germany was pushed Westward, Poland gained some German territories, URRS incorporated all the three Baltic countries and a lot of territories previously controlled by like Poland, Hungary or Romania. The two visions of the world: 1. US vision: USA had to resist the communist pressure and stand for the entire free world. 2. URRS vision: Marshall Plan violated the principle of UN and a menace for the peaceful settlement of the continent. The first try of the Cold confrontation was the Soviet blockade of Berlin and the American airlift to supply the city. The London Conference in 1948 was the one in which West and East Germanies were created giving to each ruling country controllers the total socio-political-economic supremacy in its sphere of influence: the Soviet reaction was the Berlin blockade. In March 1948 Soviet troupes restricted the movement of people and food between West and East Berlin. In July 1948, US aircrafts (former bombers now adapted to civil transportation) flew daily to supply 2000 tons of food in West Berlin and this increased in winter. West Berlin was completely encircled by the Berlin Wall (1961), Europe was divided leaving Switzerland, Austria and Yugoslavia outside any military alliance. On one side we had the Marshal Plan and the NATO (North Atlantic Treaty Organization) and on the other side the Cominform (common reconstruction of the Eastern Country under the Soviet supervision) and the Warsaw Pact (alliance of all European countries under Soviet leadership). Also, Korea were divided in two: North under the Chinese communism and South under the American capitalism. Other countries, like Vietnam or Cuba, divided into two sphere of influence. This is not the beginning of a deglobalization since the intense political interference with social life never stopped the economic development: West Europe grew fast but also East Europe grew, even though slower. The dawn of the third wave of globalization During the post-colonial period, the role of global markets expanded, partly due to internal developments inside the developed countries, and partly as a response to independence movements and economic nationalism inside the developing countries. New tools for the economic expansion were introduced, and the role of some international institutions (such as World Bank, IMF and, since 1995, WTO) became increasingly significant on the global scenario. The third wave of globalization began to be felt worldwide during the 1990s, with the first appearance of the new global information economy. In other words, the third wave of globalization is marked by the emergence, within the most advanced industrial countries, of the new economy of communication services, the media sector and informatics. During the 60-70s there was a world transaction: new tools, new organizations, fast economic development and a new immaterial level of economy. The beginning of the 3rd wave of globalization is marked by the birth of new sectors: ICT, computers… The World per capita GDP of the World is growing very fast, but this doesn’t mean that poorer people got richer too. As shown by the different per capita GDP in 113-150 countries, more countries became richer but some countries got poorer and so the inequality increased. The inequalities became unsolvable and not governable as a global issue. But in this period there was a sort of convergence: the richest countries’ growth slow down with respect to other less developed countries. However, countries e.g. in Africa remained far behind and low-growing. The world became richer in aggregate term, the number of very poor people (under the standard income) declines but the number of very rich people remained extremely low. So the movement from poverty to average is something very modest. This time, globalization was much more complicated involving a lot of other things. For example, more complicated and multi-lateral question about political hegemony and stability… Notwithstanding all the inequalities, globalization speeded out reaching a new wave of industrialization: the Third Industrial Revolution. The oil crisis during the 70s and economic crisis during the 80s pushed to the background all the efforts in order to better the international situation, leaving only the self-evident superiority of the winers, i.e. industrialized countries. Capital mobility followed especially in the 80s and a new form of economic interrelation appear: the sphere of action of the old economic flows enlarged to new immaterial flows: knowledge (patents), culture (movies, music, shows, sports…), touristic services… This created new possibilities in the economy of some countries but excluding other countries since immaterial flows are limited (e.g. there is a fixed number of people travelling, fixed amount of money available to pay services… ). In the 1970s, Europe was again the main actor inside the international trade: Europe and industrialized countries were the core of the world production. But East Asia was about to start a new sub-core in a new region of the world, jumping especially during the 90s and then in 2000. But until the 90s, the core remained Europe and the industrialized countries. Europe remained at the centre developing interconnections inside the continent (intra-trade) while all the other countries opened more (extra-trade) developing new forms of trade (e.g. semi-products). World trade developed faster than industrial production: international exports doubled production every year, due to the international commerce of semi-products. This was due to the introduction of Post-Fordism (or Toyotism), the idea that the rigidity of line production must be overcome rearranging the industrial production based on “isle production system”: productive live is divided in independent isle that produce a single piece and merge it to the core. Fordism reduce the complexity and necessity to share information because all path is common while in Toyotism there are new needs, e.g. the need to coordinate and synchronize. This will be easier when the computers will be introduced so that it will be possible to control and coordinate every productive step in every part of the world from an headquarter. The first mover inside the Toyotism was Japan, the real winner of the world situation during the 70s. Japan’s trade balance was in surplus with both USA and European Economic Community. USA’s trade balance was positive with EEC and negative with Japan. EEC’s trade balance was negative with both USA and Japan, gaining only from Africa due to inequal situation of the post-colonial arrangements. The response was the acceleration of the economic and political integration of Europe. EEC developed and more countries entered the EEC and others created partnership and agreements. à 1957: 6 members à 1973: 9 members à 1981: 10 members à 1986: 12 members à 1995: 15 members à 2004: 25 members à 2020: 27 members The creation of the EEC in 1957 triggered a lot of imitators. 1960: the EFTA agreement (European Free Trade Association). It linked some countries willing to be inside the European unification. 1967: ASEAN (Association of Southeast Asian Nations). It linked different nations in South Asia by free movement of capital and goods, few limitation of people movements, resolution of economic problems…in order to have a more direct access to the global market. 1983: ANZCERTA (Australia New Zealand Closer Economic Relations Trade Agreement). It linked New Zealand and Australia. 1991: MERCOSUR (Mercado Común del Sur). A full imitation of the EEC eliminating any barrier towards a political development convergence among South America. This project failed after less than 10 years. 1992: NAFTA (North America Free Trade Agreement). In 1989 an agreement between USA and Canada was signed, then Mexico joined and the 1992 version was signed. Nowadays NAFTA is about to fail but it produced possibilities of development, especially in Mexico, so it was an engine of globalization at that time. The last step into the current globalization was the agreement between WTO (World Trade Organization) and China in 2001. This was a great achievement but took 15 years of negotiations: China was requested to open and liberalize its regime in order to better integrate in the world economy and offer a more controllable environment for trade and investments with foreign countries, according to WTO rules. The end of this wave of globalization came abductively after the change of the century with the financial crisis at international level with a drop in the FDI ration, a recall of capitals invested abroad by industrialized countries resulting in a U-turn of this phase of globalization and the beginning of a period of uncertainty. The “logistic” properties of the new phase of globalization Also in the 3rd wave of globalization, the innovation in the socio-technical environment open new possibilities with the complete overcoming of the last barrier from a greater enlargement especially in immaterial goods: communications, computers, software… After the first phase, the application of this new instantaneous coordination permitted to better the existing productive systems and spacing and create new ones. The starting point is the explosion of international trade, during the 70s, notwithstanding the oil shocks of 1973 and 1979, thanks to 3 pillars - Toyotism - higher efficiency using scale and scope economies and standardization; - Containerization - technical improvements in constructions and maritime terminals and fall in transportation costs; - Internet; - Mass tourism Western Europe was able to heal all the wounds of the war and of the deglobalization period, being again the most important commercial area all around the world. 1/3 of European production was exported (highest percentage) whereas other regions (e.g. Latin America) were not able to. The secret behind this success was the fast application of Toyotism, which change the international division level. The philosophical pillars of Toyotism were: 1. Just in Time: use the new network of communication to organize and synchronize all productive steps and have the right part at the right time, amount and space. This is the antipode of the actual supply chain. 2. Culture: new kind of workers are needed, multi-skilled, flexible, motivated and self-organizing. Only the share of a common culture can sustain the new organization based on self-contained island of production. 3. Built in Quality (or Total Quality Approach): every island is responsible for the highest possible quality inside each step of production. Every error is a loss and must be avoided. 4. Operational Stability: every industry must grant employees stability in work, working conditions, full involvement in the social structure of the industry and high wages. The Toyotist worker is very different from the Fordist one: the worker is not dealing directly with production, but he controls machines and must be very precise. Toyotism made Japanese and Korean car produced overcome Ford and gaining the first place in the world sector. International trade even doubled world production thanks to semi-product exchange and affected especially regions outside the developed world. The new wave of innovation produced the most important outcomes in this period: jet planes, containerships, flight of shuttle, intercontinental satellite communication, cellar phone, portable computer… A great wave of innovation again fuelled the economic development and economic growth and also created new markets explaining a new fall in transportation costs, mostly communication costs. It introduced new technologies and improved also the old ones. We must begin to adopt a new enlarged commercial vision and commercial system, considering all the different regional patters, not just the world as a whole. Our world is showing a clear centre in the manufacture production (Europe and USA) but there are also new centres and then new problems coming from new phenomena. The “Arab spring” (2010-) in Northern Africa is the period of the end of dictatorship and the beginning of a democratic government but the situation is still unsettled with ongoing wars. The situation in Iraq which seems to be unrepairable since the presence of three contrasting religions doesn’t allow the creation of a state with a Western political structure. Literacy says that this new world order we are searching for can be found inside some abstract models. For example, Global Village (1989), precocious perception that something completely new was going on; Clash of Civilization (1997), scepticism towards the effects of globalization on culture and religions. The question is that UN were called for a lot of peace-keeping missions all around the world but UN itself begun an actor of conflicts. The actual world is politically fragmented as never before. Clearly globalization remains an open questions. The year 2008 as the moment of truth for turboglobalization 2008 was the year of the crisis but also a moment of truth of the third wave of globalization, called turboglobalization. A lot of questions had to be dealt with: governments, markets and financial operators had to get rid of the contradictions coming from the 80s-90s and 2000. On one side the world was politically more fragmented than before and the economics was repolarized as never before, so the globalization process became more complex. By the end of the millennium, the integration of the world was asymmetric. There was the problem of the leadership: the 19th century was the British Century and the 20th the American Century, but it was in different terms. During the British leadership of globalization, soft and hard powers were the same. During the 20th century, in the intra-war period there was no leadership while after the II WW with the bipolarization of the Cold War soft and hard powers remained two faces of the same coin used by capitalist and communist sides to gain supporters; during the turboglobalization, after 2008’s crisis, soft and hard powers begun to diverge. The economic and social integration became then more and more diverging. On one side, there was an incredible increasing in wealth in some regions. On the other side the traditional political and institutional orders were disrupted: the fall of Berlin Wall, the Declaration of Independence of Baltic Republics and the anti-communist in Eastern Europe made the Soviet system collapse leading to instability and uncertainty. In 1991 the leader of Russia allowed the other 14 republics to leave the Soviet Union, bringing to an end the Federation of Russia and their interdependences. Russia remained to most vast nation but was deprived of a lot of natural resources and geographical possibilities to interconnect to markets in Eurasia. The bloodiest end of Cold War happened in Yugoslavia, an artificial federation of states that self- destruct themselves with civil wars between ethnic groups. The conflict in Bosnia killed more than 200’000 people and generated 4 millions of refugees. The same happened in Kosovo, Albania… The idea that communism would be able to build up an idea of a “new man”, rational, progressive and free from all the unnatural labels of nationalism and capitalism, failed completely. So the actual global picture has two faces: the most fragmentated for politics but the brightest moment for economics. The total world output grew in quantity and quality of the communication and the commercial connections; in the past 50 years poverty has fallen more than in the previous 500 years. Services and immaterial goods dominate the economy; the social basis changed, resulting in a incredible population growth. Since the beginning of world trade, the access to global markets by old industrialized countries (Britain, USA, Italy…) has always been important and progressive growing, but since the 2000 new countries gained importance: Brazil, Mexico, China, Poland and Russia devote a great share of GDP to export. Entering the international market is difficult, some countries failed: China succeeded but Brazil and Mexico failed, and Poland is struggling to maintain its position. It is not easy because for some commodities the global market is the only way for buying and selling in the world whereas other goods, e.g. fresh foods and specific products, are not easy to globalize. The developing countries accounted for only 1/5 of the world GDP and it got worse over time with respect to developed countries, making the gap difficult to fill. But inequalities, considering the quality of production, i.e. labour productivity, persist also within the same industrialized area (e.g. Norther-East Europe). Why? Thomas Piketty claims that since the 80s (beginning of the 3rd wave), private capital was the one developing faster inside developed nations, while public capital declined: the privatization of a lot of services (insurances, health care, education, public companies…) allowed a decrease in the redistributive power of the state, concentrating wealth in private and fewer hands. This movement hid the impoverishment of other people because it was not a direct reduction in their income but in public services and possibilities. At global level, the new sources of growth are the immaterial services. The old sources of growth (agriculture) became negligible for developed countries but fundamental for developing countries. Everyone experienced a growth over time but maintaining the disequilibrium: the primary products are essential and cheap and became even cheaper while services became more and more evaluated and expensive. This results in new aspect of the “poverty trap”: exchanging poor materials with high-value materials, you are doomed to remain poor while the other gets richer and richer. The situation got more complicated thanks to a new kind of economic partnership: Bilateral Investment Treaties (reciprocal promotion and protection of investments in companies based in the other country) and other forms (free trade agreements, double taxation treaties, regional trade agreements…). In 2002 the number of double taxation treaties counted for 2256. Freezing an unequal relationship between developed and developing countries is like establishing a new colonial relationship, dealing with financial exchanges and services: notwithstanding, this unequal relationship is still less unequal than a complete free and unruled market. Clearly, Asia is the winner of the creation of the new market of manufacture goods but the effects of the 3rd wave still favoured the already rich countries. This new evolution changed the paradigm used to of development. In the 90s, the UN introduced the Human Development Index, which aims to measure the overall achievement of every country in 3 basic dimensions of human development: longevity, knowledge and standard of livings. This index takes into consideration factors like “life expectancy at birth”, “literacy rate”, “gross enrolment” … so that it seems that it’s the country’s fault if it is underdeveloped. This unequal world is the ground for the crisis of 2008: the unbalances and ungoverned capitalism was and still is impossible to govern by national governments and the only. At first, President Bush underestimated the financial crisis and said that the only thing to do is to wait for the growth to come back spontaneously. But it was not. The crisis and inequalities developed and possibility to access to wealth became more and more unequal around the world. The result of the 3rd wave of globalization in productive terms are huge. The years 1990-2010 were the most favourable in the entire history but inequalities and instability plays a part in the economic growth and something also explains it, since the over-exploitation of resources may lead to crisis. The Construction of a new Global Awareness The decade 1990 witnessed an economic recovery after the stagflation of the 1980s, but it was also the scenario for the construction of a post-Cold War order on the political side, and the beginning of a new wave of globalization. Since then, the world has become ever more connected, with processes of production and consumption no longer limited by material-based modes of mobility, transport and communication. This new world has a new architectural structure: spaces and processes changed their nature. Spaces and time are not playing any role, mostly in the commercial view: there is no different among regions and time does not matter anymore since you can have what you need when you need it. Processes are not an item anymore because you can fully control every process from anywhere in the world. The increase in the global interconnectedness created more inequality, instability and uncertainty; this is the new identity of this new globalization form. In 1989 the fall of the Berlin Wall became a symbol of the fall of communism and Soviet order. The capitalist world was taken by surprised since this was unexpected. Eastern German movements forcing open the border. The collapse of communism reflected itself all around Europe since the rest of Eastern Europe (Czech Slovakia, Yugoslavia, Hungary…) followed. The Soviet relations during the Cold War shifted from conflicts and cooperation periods: before 1983 confrontation prevailed while during the 80s a commercial opening started. The coldest moment of the Cold War was the missiles crisis in 1962 then the situation freezed and two blocks were aware of the limited supremacy inside their sphere of influence and the impossibility to influence each other.