The Origin of Globalization

Are the effects of 2007’s economic crisis more catastrophic than those produced by the 1930’s Great Depression? The persisting economic crisis seems to have an ancient origin or, better, more than one father. So, it is pretty hard to compare those two phenomena because they are similar only nominally and different under multiple points of view. In particular, in 1930’s, the scenario was deeply another one, the size of the crisis affected a restricted number of countries (especially the United States and European nations) and the recession arose from the industrial sector. It is for the aforementioned reasons that maybe today people prefer talking about the global crisis and not simply about the economic crisis. In Western countries, the thirties scenario came after the First World War and a “relatively” short period of expansion, while today, in the industrialized world, the context ensues from a period of about sixty years of peace, during which developed countries were able to exploit various opportunities coming from a gradual economic integration and contemporaneously building the foundations of the current crisis. Nevertheless, the issue seems to have only one loser: the industrialized world, which, for decades, improved, more or less, their welfare. In the world of today, developed countries are still struggling to way out from recession, whereas least developed economies are managing a faster growth. Hence, does it make sense of talking about global crisis yet? Generally, people tend to consider a phenomenon as negative only when it occurs in Western countries. The United States and Europe are heavily affected by negative economic growth, so public opinion argues about the economic crisis. In contrast, China and India, which are also the most populated nations, are performing high rates of growth. Hence, within these two countries the global crisis does not exist or, in the worst case, it is a weaker growth than the previous. But, this is clearly growth and not crisis! Developed countries started going into crisis since 1990’s, when the Cold War finished, the Soviet Union collapsed and the process of “westernization” of East European countries began. That was a first step towards the “Europeanization” of economy or, in other words, a sort of globalization on a European scale. But, can we state that the Cold War’s end, spawning new economic opportunities, determined the globalization process? According to David Charles LEWIS and Karl MOORE (“Globalization and the Cold War: the Communist Dimension”, Management & Organizational History, Vol. 5, n° 1, 2010), globalization existed before the Cold War ended and had two targets. The former pursued by Western countries and it was market oriented. The latter chased by Communist countries and it was collectivism oriented. So, it is clear that after the Cold War ended there was only a sole way of interpreting this phenomenon and the fall of Communism was only a mean to accelerate liberalization processes, openness to trade and, consequently, globalization. However, maybe, a big push to globalization was laid ten years before, in 1980, thanks to so called “reaganomics”, that is the economic policies by Reagan, based on economic development driven by supply and not by aggregate demand as required by Keynesian economic theories.

Author: Emanuele COSTA
Published by: Il Nuovo Picchio n° 01/Gennaio 2014 con il titolo «The Origin of Globalization»