Chapter 3 The Making of a Global World

Overview

This chapter explores the historical processes that led to the interconnected global world of today. It begins by examining pre-modern trade and cultural links, such as the Silk Routes, and the global spread of food crops like potatoes, which significantly impacted populations. The chapter then delves into the transformative impact of European conquest, disease (like smallpox), and trade from the 16th century onwards, which facilitated the global spread of resources and the shaping of the world economy. It details the changes brought by technology, trade, and capital flows in the 19th century, the consequences of colonialism, and the devastating effects of the Great Depression. Finally, it discusses the post-World War II economic order established by the Bretton Woods institutions (IMF, World Bank) and the subsequent rise of globalisation, marked by technological advancements, liberalisation of trade policies, and the increasing influence of MNCs.

The Pre-Modern World

• Silk Routes Link the World: Ancient trade routes connecting Asia, Europe, and North Africa facilitated the exchange of goods (silk, pottery, spices, metals) and ideas (Buddhism, Christianity, Islam).
• Food Travels: Crops like potatoes, maize, and tomatoes spread globally through trade and travel, significantly impacting diets and populations (e.g., the Irish potato famine).
• Conquest, Disease and Trade: European exploration from the 16th century led to conquest and colonization, aided by their superior military technology and, crucially, by European diseases (like smallpox) to which indigenous populations had no immunity, causing widespread decimation. Trade in precious metals like silver also fueled European wealth and expansion.

The Nineteenth Century (1815-1914)

A World Economy Takes Shape

In 19th-century Europe, agricultural overproduction led to falling food prices, impacting farmers and causing unemployment. Britain, facing food shortages and needing raw materials for industry, abolished Corn Laws, allowing cheaper food imports. This shifted global agriculture towards specialized production for export, with lands cleared in colonies (like India) and new regions (America, Australia) to meet European demand. Railways and larger ships facilitated this vast movement of goods and people.

Role of Technology

Technological advancements like steamships and railways were crucial. They reduced transport costs, enabling faster movement of goods and people, thus facilitating global trade and migration. For instance, refrigerated ships allowed the transport of perishable foods like meat, lowering prices and diversifying diets.

Late Nineteenth-Century Colonialism

The expansion of trade and closer global economic ties often meant loss of freedom and livelihoods for colonized societies. European powers carved up Africa and other regions, often drawing arbitrary borders. Colonialism imposed new economic and social structures, prioritizing the extraction of resources and labor for European benefit, sometimes aided by devastating diseases like rinderpest in Africa, which destroyed livestock and weakened resistance.

Rinderpest, or the Cattle Plague

The arrival of rinderpest in Africa in the 1880s wiped out vast numbers of cattle (90%), destroying African livelihoods, concentrating scarce resources in the hands of colonizers, and facilitating their conquest and control over the continent.

Indentured Labour Migration From India

Hundreds of thousands of Indians migrated under indentured labor contracts to work on plantations, mines, and construction projects worldwide, particularly in the Caribbean, Mauritius, and Fiji. Recruited through deceptive practices, they faced harsh conditions, with many becoming victims of a 'new system of slavery.' Their struggles and cultural fusion created unique identities in their new homelands.

Indian Entrepreneurs Abroad

Indian bankers (Shikaripuri shroffs, Nattukottai Chettiars) financed export agriculture, and traders followed colonial powers, establishing businesses globally.

Indian Trade, Colonialism And The Global System

Colonial policies transformed India into an exporter of raw materials (cotton, indigo, opium) and importer of finished goods. British industrialization led to a decline in Indian manufactured goods exports and increased raw material exports. Britain benefited from a trade surplus with India, which helped balance its deficits elsewhere, integrating India into the global economy primarily as a supplier of resources and a market for British goods.

The Inter-War Economy

The period between World War I and World War II was marked by economic and political instability.

Wartime Transformations

World War I (1914-1918) was the first modern industrial war, involving massive destruction and the use of industrial production for warfare. It led to economic shifts, with the US emerging as a major creditor nation and Europe becoming indebted. Wartime industrial restructuring and recruitment changed social dynamics.

Post-War Recovery

Post-war recovery was difficult. Britain struggled to regain economic dominance, facing competition from newly developed industries in India and Japan. The US economy recovered faster, financing post-war reconstruction and becoming a major creditor. However, fragile economic links and protectionist policies eventually contributed to instability.

Rise Of Mass Production And Consumption

The 1920s saw mass production, pioneered by Henry Ford, employing assembly lines to lower costs and increase output. Higher wages in industries like Ford encouraged mass consumption of goods like cars, creating an economic boom fuelled by hire-purchase systems and housing investment.

The Great Depression

Beginning in 1929, the Great Depression severely impacted the global economy, causing catastrophic declines in production, employment, and trade. Caused by factors like agricultural overproduction, withdrawal of US loans, and protectionist policies, it hit agricultural economies hardest. In the US, it led to bank collapses, business failures, and mass unemployment.

India And The Great Depression

The depression significantly affected India's economy. Exports and imports declined, agricultural prices crashed, and rural indebtedness increased as the colonial government refused to reduce revenue demands. While urban incomes stabilized due to falling prices, rural India faced severe hardship and unrest, contributing to the context for the Civil Disobedience Movement.

Rebuilding A World Economy: The Post-War Era

Post-War Settlement And The Bretton Woods Institutions

Lessons from the inter-war period led to the establishment of the Bretton Woods system (1944). This aimed for economic stability and full employment by creating institutions like the International Monetary Fund (IMF) for managing external imbalances and the International Bank for Reconstruction and Development (World Bank) for financing post-war reconstruction. The system was based on fixed exchange rates, with the dollar pegged to gold.

The Early Post-War Years

The Bretton Woods system facilitated unprecedented growth in trade and incomes for Western industrial nations and Japan during the 1950s-1970s. Developing countries, often former colonies, faced challenges like poverty and lack of resources, with international institutions initially catering more to the needs of industrial nations.

Decolonisation And Independence

Following World War II, many colonies in Asia and Africa gained independence but were often economically weak and burdened by colonial legacies. They sought fair trade terms and control over their resources, leading to the formation of the Group of 77 (G-77) to demand a New International Economic Order (NIEO).

End Of Bretton Woods And The Beginning Of ‘Globalisation’

From the 1970s, the Bretton Woods system weakened due to factors like the US dollar's declining value and rising costs of overseas involvement. Floating exchange rates replaced fixed rates. Developing countries increasingly borrowed from private banks, leading to debt crises. Simultaneously, shifts in production by MNCs to low-wage Asian countries, facilitated by rapid technological advancements in ICT and telecommunications, marked the acceleration of globalisation.