Industrialisation and Globalisation
Industrialisation and Globalisation form a critical theme in UPSC History Optional (World History), examining how the Industrial Revolution became the decisive turning point in the emergence of the modern global economy. This article explains the concept and dimensions of globalization, its economic form, and — most importantly — the deep structural link between industrialization and globalization, tracing how capitalist production, colonial markets, and free trade together produced the interdependent world economy we recognise today.
Globalization
- Globalization is the process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture.
- Advances in transportation and telecommunications infrastructure — including the rise of the telegraph and, later, the Internet — have been major drivers of globalization, generating ever-greater interdependence of economic and cultural activity.
- The term “globalization” has been increasingly used since the mid-1980s, and especially since the mid-1990s.
- The word derives from the verb “globalize,” meaning “to make worldwide in scope.”
- In 2000, the International Monetary Fund (IMF) identified four basic aspects of globalization:
- trade and transactions,
- capital and investment movements,
- migration and movement of people, and
- dissemination of knowledge.
- Environmental challenges such as climate change, cross-boundary water and air pollution, and over-fishing of the oceans are also closely linked with globalization.
- Globalizing processes affect, and are in turn affected by, business and work organisation, economics, socio-cultural resources, and the natural environment.
- While some scholars place the origins of globalization in modern times, others trace its history to well before the European Age of Discovery and voyages to the New World.
- Large-scale globalization began in the 19th century, with the connectedness of the world’s economies and cultures growing very rapidly in the late 19th and early 20th centuries.
Economic Globalization
- Economic globalization refers to the increasing economic interdependence of national economies across the world, driven by a rapid rise in the cross-border movement of goods, services, technology, and capital.
- It comprises the globalization of production, markets, competition, technology, and corporations and industries.
- While the “globalization of business” centres on the reduction of international trade regulations, tariffs, taxes, and other impediments to global trade, economic globalization more broadly refers to the process of increasing economic integration between countries, leading to the emergence of a global marketplace, or a single world market.
Industrial Revolution and Modern Globalization
- The 19th century witnessed the advent of globalization approaching its modern form.
- The Industrial Revolution is said to mark the most fundamental transformation of human life in world history.
- In the centuries that followed, the world economy began to emerge as a single unit, in which advanced regions were linked to colonies through a defined division of economic activity — a system of economic flows encompassing trade, international payments, migration, and capital transfer.
- From the Industrial Revolution onwards, the world economy grew steadily more integrated, and regions became increasingly dependent on one another — a tendency that prepared the ground for what we today call “globalization.”
- Other processes — migration from Europe, the development of trade, and colonization — are likely to have contributed to globalization far less than the Industrial Revolution itself.
- The world before industrialisation had already witnessed great population movements and colonisation, yet neither the migration of Central Asian nomadic peoples toward the West, nor the colonisation policies of the Ancient Greeks or Romans, produced results comparable to European migration and colonisation of the modern era.
- Colonisation and population movements, therefore, cannot be treated as prominent factors of globalization in their own right; they became significant only as an unprecedented outcome of industrialisation. Without it, European population migration might well have remained similar in scale and effect to earlier population movements across the earth.
Link between Industrialization and Globalization
- A review of the history of industrialisation shows that the world has been undergoing the process of globalization for at least the last four centuries.
- Before that period, great civilisations, empires, and economies had remained confined to particular regions: the Mesopotamian Civilisation remained around the Tigris and Euphrates; the Roman Empire controlled the environs of the Mediterranean; and the Silk Road trade was confined to the regions stretching from China and India, through the north and south of the Caspian Sea, to the Mediterranean and Black Sea.
- None of these earlier structures managed to connect all parts of the world to each other in the way we experience today.
- Several factors are seen as contributing to the modern globalization process, including:
- fundamental social and political changes during the Reformation era,
- migration of Europeans to the New World,
- colonisation of non-European territories,
- the Industrial Revolution, which incited the emergence of a world capitalist economy, and
- the development of technological changes.
- If globalization is understood as a grand, cumulative process, these earlier developments can be seen as steps leading up to it — though special attention must still be given to industrialisation in explaining the origins of globalization.
Roots of the Industrial Revolution in European Social and Political Change
- The origins of the Industrial Revolution lie in the drastic social and political changes that swept through Europe in the 15th and 16th centuries.
- The Reformation and the Enlightenment fundamentally transformed European societies, whose economic consequences paved the way for the rise of the global market.
- The Reformation reduced the power of the Pope and encouraged national unification, while the Enlightenment freed human reason from the scholastic framework.
- The implications of these changes were profound — new innovations, new ways of thought, the development of the physical sciences, and the emergence of an unprecedented human adventure in history.
- It can be argued that the most prominent impetus behind the globalization process was the capitalist world economy, itself incited by the Industrial Revolution.
- This capitalist economy created its own structures across the world, based on the capitalist mode of production, with production, consumption, international trade, rivalry, and wars among competing states as its main components.
- While the capitalist world economy remains the motor of globalization, and its implications are felt today in fields as diverse as culture, politics, society, environment, and the arts, the focus here remains on the close link between industrialisation and globalization.
Overseas Trade, Colonial Rivalry, and the Rise of Home Markets
- The beginning of overseas trade contributed to the development of navigation, which in turn created competition among European states.
- Internal European wars of the 17th and 18th centuries were transferred to overseas rivalries, with Spain, Portugal, France, the Netherlands, and England as the main contestants in this struggle.
- Most European states created their own domestic markets and established trade links between their colonies and homeland.
- The creation of a home market resulted from the abolition of feudal privileges granted to landlords over vassals and to the Church over its lands.
- The confiscation of Church lands, the liberation of vassals, and the undermining of the guild system together produced a genuine home market, as both idle lands and labour, previously controlled by landlords and the Church, were brought into the market.
- Because the dependency link between labour and land had been broken, men now had to work harder for subsistence, creating rising demand for primary products such as food and clothing.
- It was common at the time for people to avoid working once their basic needs were met; as with the Poor Law in England, wages were deliberately kept low to compel people to work more for survival.
- This produced an enduring cycle in which harder work generated further needs, which in turn demanded still harder work.
- In England, low wages resulted in lower-cost textile products, and Englishmen began exporting cloth first across Europe and then across the world — which is why the textile industry became the first step of the Industrial Revolution.
Colonies, Competition, and the Global Market
- Colonies were initially used to obtain raw material, particularly cotton. But as the Industrial Revolution increased production, colonies grew important once again — this time as markets for exporting textile products.
- New techniques in the production process brought competition and were readily adopted by other European countries.
- The aim of domestic production soon exceeded the borders of the home market, as the whole globe became the target of capitalists, with innovations and inventions accelerating in order to reduce production costs and secure competitive prices.
Capitalism and the Formation of Nation-States
- The relationship between the rise of capitalism and the formation of nation-states in Europe is crucial to understanding the nature of globalization.
- The development of trade in the 17th and 18th centuries was accompanied by a scientific outlook, state-building, and war.
- The use of gunpowder helped central rulers remove local lords, while the Reformation broke loyalties that extended beyond national borders.
- To finance their wars, rulers encouraged taxable activities, chiefly trade and the production of primary agricultural products.
- The development of capitalism and state-building in Europe fed off each other: merchants, entrepreneurs, investors, and bankers sought secure areas for profit, while rulers needed taxable activities to finance their private armies. The aims of both parties converged following the 17th century.
- As nation-states formed and capitalism began to flourish, capital acquired a national character, and states protected their capitalists by introducing high tariff barriers in newly industrialising countries — even as already-industrialised countries like Britain forced other nations to remove trade barriers of their own.
- In their early formation, European states projected colonial foreign policies to facilitate the overseas activities of their businessmen; however, after the late 19th century, centralised governments backed by standing armies and strong bureaucracies turned into absolutist regimes.
- As capitalist investment enlarged and production increased, the aims of capitalists began to extend beyond the national market. (World War I can be seen as a result of the irreconcilable imperial policies of European countries, while World War II was partly a result of the character of national capitalism.)
- Once national capitalism had been formed within secure national borders, it began to accelerate the forces of globalization through its activities abroad, which would soon create an interdependent world capitalist economy.
Free Trade and the Global Economy
- Free trade formulation also contributed significantly to globalization.
- Adam Smith, the ancestor of free trade theory, argued that the earth’s resources could be utilised at an optimum level only through international free trade — allowing an international division of labour, whereby each country would inevitably produce the commodity for which it held a price advantage.
- This theory was advocated mainly by English scholars, since England was believed to be the most industrialised country of its time.
- The Industrial Revolution thus appears as a genuine turning point in the emergence of the world economy.
- It strengthened capitalism and gave it a global character, since industrialisation created a new kind of society and new market relations, providing the world capitalist economy with a convenient circumstance in which to grow on a global scale.
- The resulting globalised market went on to trigger other dynamics in terms of nationalism, culture, religion, identity, and locality across the world.
Defining Features of Globalization
- The defining features of globalization appear to be outcomes of the “something” that is the Industrial Revolution. Among the many outcomes the world has undergone over the last few centuries are:
- interdependence among countries,
- increasing world trade,
- interconnected financial markets,
- liberalisation and democratisation,
- expansion of consumption culture,
- homogenisation in arts and entertainment, and
- the emergence of politics of locality in terms of authentic culture and identity.
Why Industrial Production Is the Logic Behind Globalization
- To better understand why the Industrial Revolution is the main impetus behind globalization, it helps to examine the underlying logic of industrial production and its globalising forces.
- In a traditional society, people were largely self-sufficient, with food and clothing extracted from land and animals to a great extent.
- Worldwide trade had always existed among countries and continents, but it was chiefly related to luxury commodities targeted at a small segment of society, with the rest of society remaining largely self-sufficient in meeting its own needs.
- While such trade can be seen as one of the causes of globalization, the underlying determinant is the logic of industrial production, which transformed the economic life of people, for the following reasons:
- First, because it focused on massive production, the production cost of many products decreased.
- Before industrialisation, the world was in a rough equilibrium in terms of economic activities, including both rural and city life.
- Industrialisation in Europe disrupted this equilibrium and created massive new opportunities for competition and conflict among states, while also creating new areas of human settlement — the industrial cities.
- Second, industrial production required a different combination of inputs in terms of raw materials.
- Whereas the number of inputs used in traditional production was limited, this number and variety increased dramatically under industrialisation.
- Since each region possessed different kinds of raw materials, securing routes to and control over them became a strategic objective, intensifying competition among European powers to control colonial territories.
- Third, the reduction in costs and the resulting massive production necessitated marketing strategies on a global scale.
- As the volume of production increased, colonies were gradually transformed from being sources of raw material into markets for industrial commodities.
- Fourth, cheaper production, together with the need for raw materials and markets, fostered dependency links among regions.
- Trade and economic relations increased not merely because of luxury trade, as in earlier centuries, but because of the basic needs of ordinary people — a shift that expanded the scale of economic activity across the world.
- Fifth, these developments prepared the infrastructure for the emergence of a worldwide financial system that connected markets more tightly to one another.
- The prices of raw materials and industrial commodities began to be determined within a competitive environment, in which some cities of the world emerged as centres of financial services.
- Particularly after the beginning of the second half of the 20th century, production and financial services became a new axis of the international division of labour.
- While many production facilities were transferred to developing regions, defined as centres of “heavy production,” financial services, including banking, credit, and insurance, became the focal economic activity of the early industrialised countries.
- First, because it focused on massive production, the production cost of many products decreased.
Industrialisation, Imperialism, and the Global Market
- Industrialisation allowed for cheap production of household items using economies of scale, while rapid population growth sustained continuing demand for commodities. Globalization in this period was decisively shaped by 19th-century imperialism.
- After the First and Second Opium Wars, which opened up China to foreign trade, and the completion of the British conquest of India, the vast populations of these regions became ready consumers of European exports.
- It was in this same period that areas of sub-Saharan Africa and the Pacific islands were incorporated into the world system.
- The conquest of new parts of the globe, notably sub-Saharan Africa, allowed Europeans access to valuable natural resources such as rubber, diamonds, and coal, helping to fuel trade and investment between the European imperial powers, their colonies, and the United States.
- Globalization is, in essence, about everything that connects all parts of the world to one another. As explained above, however, one must recognise that the main determinant of this process has been the logic of industrial production.
- For this reason, although many outcomes of globalization relate to society, culture, and politics, its prominent agenda continues to revolve around finance, investments, and standards — all of which remain components of an underlying industrial mentality. Globalization, therefore, remains deeply embedded in the logic of industrial production and its global requirements.
Conclusion
- In sum, it can be argued that the substantial social and political transformations that swept through Europe after the 16th century resulted in the rise of the capitalist economy. But without the Industrial Revolution, it is unlikely that this economy could have expanded on a global scale.
- Because of industrialisation, capitalism succeeded in establishing a worldwide market, in which all parts of the world — whether developed or underdeveloped — became integrated within global transactions.
- The globalization process we experience today continues to run on the global market structures first created by the Industrial Revolution.
Practice Question
- Why was industrialisation the main impetus to globalization?
