History of economic universalization

Seeds of universalization before the great discoveries

Remote trade in Antiquity and with the Middle Ages

The “economy-world” Mediterranean

For historians like Fernand Braudel or Immanuel Wallerstein, the economic structure of the modern world already exists as from the 15th century, and even in the Antiquité.

capitalism was always monopolistic, and goods and capital did not cease travelling simultaneously, the capital and the credit having always been the surest means of reaching and of forcing an exterior market. Well before the 20th century, the export of the capital was a daily reality, for Florence as of the 13th century, for Augsburg, Antwerp and Genoa with 16th. At the 18th century, the capital runs Europe and the world.

A world within the meaning of Braudel indicates an autonomous economic entity. The economy-world is a delimited geographical space; it thus is not necessarily of the ground in its totality, but about an area more or less extended according to the time and the place. In the center of this geographical space radiates a dominant city which plays the part of economic capital. Around it structure an organic space in successive zones. One finds there a heart economic and policy consisted the closest neighborhoods of the economic capital, then while moving away come from the intermediate zones, and finally the periphery. In the center of the economy world concentrates the richness of the merchants, it is there that the incomes and the luxury items converge, it is in this point that arts, science and freedoms develop. The countries of the intermediate zone are marked by a less advanced industry, a more dubious financial system and freedoms are done rarer. The countries in periphery of this world are dedicated to the least advanced productions in a very often slave economic system.

For Immanuel Wallerstein, capitalism is based in this uneven geographical space and the inequitable trade which binds its various components. It benefits there from the existence of the systems feodalists and slave which surround it. Admittedly the capitalist center is depend on the periphery for its provisioning, but its superiority enables him to impose its law on it. It would be in this optics that Europe, last from feudalism to capitalism, would have gone to reinvent slavery in the new world. But this analysis is not enough, according to Braudel, has to explain the emergence of the great capitalism, which is based, thanks to the great discoveries, in a remote trade with other large economy-world like those of Asia (China, the Indochinese Peninsula…) and not only in the exploitation of its own periphery. These relations, a priori surface and of little importance in total flows, are however those to which is dedicated the European large capital from 16th and of 17th. The reason of the paramount importance of its flows, a priori minor, is that only the trade of food products produced in regions remote makes it possible to constitute situations of oligopolies, to see monopolies favorable to the enrichment of the merchants.

Historically, the 14th century is marked in Europe by the domination of the Italian cities, in particular Venice and Genoa, centers of a world which extends through the Mediterranean. From the end of the 16th century, Italian hegemony declines and the products counterfeited by Dutch invade little by little the Mediterranean, ruining by the force the Italian trade. For a time, Antwerp and Amsterdam become the centers of new a economy-world.

The era of the mercenary attitude

The Dutch cheese towards the Eastern Indies

The advent of the economic domination of the United Provinces marks a turning in the history of universalization. With the creation of the first Company of the Indies by Dutch in 1602, capitalism accelerates the long process of the internationalization of the exchanges. The appearance of the current mercantilist, translation economic of the writings of Machiavel in a context of emergence of the concept of State-nation pushes the countries of Europe in a race with the territorial expansion at economic ends. Already the trade bullionist of the powers of the Iberian peninsula had to lead to the installation of a staple trade between South America and Europe.

The company Dutchwoman of the Eastern Indies is designed like a monopoly of right given to the owners of a capitalist company, but under a narrow control of the State. It is historically about the first large transmitting company of actions and of obligations It is revealing rooting of modern capitalism in a monopoly commercial towards the remote grounds, as described by Fernand Braudel.

This capitalist company is more than one simple company. It has fleets of war, true terrestrial armies which deliver wars to foreign kings.

Far from Amsterdam, the company is devoted even to a trade of India in India between its various counters, managing a lucrative trade which does not have as an ultimate destination its metropolis. By 1670,107 ships of the only Dutch company go from counters in counters to India. To 17th and to 18th nearly a million people were transported by the ships of the company.

Towards America while passing by Africa

From the 16th century, an important staple trade is structured is set up through the Atlantic. The Portuguese import of their American colony, the wood Brazil and the indigo which are used to make dyeings, while the Spanish galleons, attacked by the Pirate S English and Dutch, bring back the Or American mines. At the dawn of the 17th century the Portuguese trade is more concentrated on the transport of the Sucre, which reaches already at the time 14.000 tons, for gold the annual trade exceeds the 10.000 tons at the beginning of the 18th century. French has a trade quasi no one with Canada, which they lose without great regrets in 1763 with the profit of the British crown. The essence of the French trade is done with the the Antilles which produce sugar and spices. To allow its many imports towards the metropolises of Europe, large the power set up a profitable trade implying the Africa.

The triangular Commerce is based on barter of European goods in Africa against black slaves resold with the owners of plantations of the Antilles, South of the futures the United States and are also used to feed the Portuguese mines of the Brésil. Before 1650, this inhuman trade concern on average 10.000 people, but the development of the colonies of plantations of the Antilles and the American cotton agriculture causes need again which increase forced demographic flows. Flows of slaves coming from the Black Africa towards the colonies concern 900.000 people at the 16th century, to pass to 7 to 8 million to the 18th century. As from the 19th this time them milked négrières are prohibited by large the power (revolutionary France , the Europe in 1815, the the United States) under the influence of the philosophical thought of the Lumières and the economic thinking of the traditional ones.

The year 1776 marks the end of the domination of the thinkers mercantilists, thanks to the publication of the text founder of Adam Smith which poses the great principles of liberalism, but also the first dispute of the British imperialism in the Déclaration of independence of the United States of America . In margin of a continental war between American and English, the European powers tear in a commercial war which has already a world dimension. The French fleet and the Spanish and Dutch ships fight in the Western Atlantic not to support the American dreams but to make sure control of the Antilles, among the richest territories of the world. With the other end of the world, France and England also fight since the middle of the 18th century for the control of the counters of India.

Liberalism and the Industrial revolution

Birth of free trade

The publication of the theses of Adam Smith in 1776 had not failed to attract the curiosity of controlling, and since 1786 the France and the England had signed a first treaty, called “Traité Eden-Rayneval”, in order to limit the obstacles to the trade between the two countries. However the disorders of the French revolution and the Napoleonean Guerres delay for a time the rise of the Libre-échange.

In fact, controlling them remain for the majority from a point of view mercantilist whose policy is based on the fear of the foreign trade. With the the United States, Alexander Hamilton, Secretary with the Treasury, recommend in 1791 the protection of industries of the territory against the threat of British industry. If the US market is invaded by the products of a British economy by far dominating, never no incipient American industry will be able to survive. In Great Britain, the Corn Laws, which protect British agriculture against the foreign imports are revotées and defended by the landowners, in spite of the attacks of the classical economists. Finally the German states meet in a customs union in 1834, the Zollverein , but follow the recommendations of Friedrich List consisting in adopting a “educational protectionism” to protect industries in childhood.

The fight for free trade is virulent only in England. It is not a question of a conflict between two countries, but of an internal opposition between two different social groups: landowners on a side, industrialists of the other. Its last show the protectionist laws to cause a rise in the price of the bread, which results in a rise of the Salaire S of the workers, and with final reduction of the Profit S. This analysis had been developed by David Ricardo since 1817. He explained why the rise in the price of the grain benefitted the shareholders, and harmed to the industrialists who were to increase the money wages to ensure their workmen the vital minimum. In the long term this dynamics had, according to Ricardo, to carry out the economy towards a null growth. Joined together by Richard Cobden within a industrial lobby , the Anti-Corn Laws League , the capitalists of Manchester agitate the proletariat to obtain “bread good-market”. Whereas terrible a famine has just touched the Ireland, they obtain government of Robert Peel the abrogation of Corn Laws in 1846 following a dubious parliamentary battle. Breaking with logic mercantilist, the the United Kingdom, first power of the world, withdraws an obstacle with the foreign trade without requiring the least commercial compensation on behalf of the unfavourable powers.

The opening, without conditions, to the British market to the other great powers of the time is not enough to impose a dynamics of liberalization of the International business. The the United Kingdom is then by far more the economic great power of the world and this hegemony worries the foreign industrialists so that the speech free-trader pains to convince abroad. In France however, Napoleon III is sensitive to the ideas of traditional French (Jean-Baptiste Say, Frederic Bastiat) and of the Saint-Simonian Michel Chevalier. This last obtains from the emperor to negotiate with Richard Cobden a treaty aiming at tightening the commercial links between France and the United Kingdom. In spite of the savage opposition of the French industrialists an agreement of free trade is signed in 1860.

The workshop of the world

It is thus according to the logic of the specialization that England will neglect its agriculture, however most productive of the world at the time, with the profit of its industry. But this decision falls under a world logic which will not be without consequences for the colonies of its immense empire. India, exporting Net of textile product at the beginning of the 19th century, sees most of its industry destroyed by the British imports of cotton fabrics and must specialize in an agricultural production. However, during first half of the 19th British trades corn and the other great food resources with the the United States, and decides dedicated grounds of the India to the tropical cultures like the Coton or the Indigo. Consequence of this specialization, the Indian food production returns in a phase of decline. India depends then on the selling price of its exports to ensure its food via the importation, undergoing famines when the economic situation is unfavourable for him.

The industrial revolution thus makes it possible to the British to set up a economy-world whose manufactures of Great Britain are the center, and of which military and naval power of the constrained empire colonies with various specializations. Near to India, the island of Ceylon devotes itself very whole to the production of the while the British end up discovering a new resource India: the poppy cultivation. The principal outlet for this lucrative production is not far, in China, but the Chinese Empire fears the consequences of the consumption of opium on the good health of its country and the importation prohibits some. The British thus deliver a maritime war to China, known as “Guerre of opium” to obtain in 1842 the complete lifting of all the restrictions on the trade of this drug.

The “first universalization”

Certain historians or economists, with the image of Suzanne Shepherd, describe as the “first universalization” the period of expansion of the trade and intensification of the exchanges of capital which appears between the middle of the 19th century and the beginning of the First World War.

Flows of goods

The Industrial revolution provided to some countries like the the United Kingdom, the France, then the the United States and the Germany quasi the monopoly of the manufacturing outputs, which results in the installation of a international Division of work: the rich countries exchange goods manufactured with the poor countries against foodstuffs and raw materials. The day before the First World War, the trade of these primary education products represents more half of the world commerce in value.

The expansion of the international business is supported by the Innovation S in the field of the Transport S, in particular of the maritime transport. It is about the development of the Railroads, but especially of the lowering of the maritime costs of transport: according to Paul Bairoch, the average costs of transport (insurance and ancillary costs included/understood) expressed as a percentage of the value of the imports (CIF) pass among 17 to 20% in 1830 to approximately 8% in 1910. This tendency is allowed by the progressive development of the navy vapor (the tonnage of the fleet with vapor of the United Kingdom exceeds that of the sailing ships only in 1883) and the realization of large channels: the Suez Canal, inaugurated in 1869, reduced of 40% the distance between London and Bombay. In the maritime transport, the fall of the costs would reach 70% between 1840 and 1910.

This tendency is added to the signature of bilateral treaties of free trade (which appear multilateral because of Clause of the most favoured nation) which follow to Europe the Franco-British treaty of 1860. Only the United States, following the victory of North in the American Civil War, reinforces their protectionist policy.

Finally the exchanges grow much more quickly than the production, and reach, relative on the level of the production, the levels which will not be equalized before a long time. Thus, whereas it was approximately 7,5% about 1850, the Taux of opening to the export (i.e the ratio exportations/PIB) of France passes to 15,3% in 1913. It is about a rate similar to that noted the day before the years 1980.

Financial flows

The last decades of the 19th century are also marked by an intensification of international financial integration. The United Kingdom, in particular, finance of the projects on the majority of the continents.

Between 1880 and 1913, the capital passes the Frontière S relatively freely. London is the capital of this first financial globalisation, thanks to the surpluses of saving which made it possible to release the English Industrial revolution. France is the second large world investor.

Certain years, the United Kingdom exports in capital the equivalent of 9% of its GDP, follow-up of near by other European countries. Exports Net of French capital between 1887 and 1913, for example, accounted for 3,5% of the national product, a proportion higher than the current percentage. The countries of America benefit as for them from the British capital: Argentina reaches current balances equivalent to nearly 19% of its GDP.

At that time, world finance concentrates primarily on development projects, i.e. the construction of great infrastructures (factories, railroads, channels…).

First world-wide crises

Great Depression and end of the first universalization

The Second universalization

The new world order

The rise of the world commerce

Transnational firms

The financial globalisation

Dollars become European

In 1971, the US president Richard Nixon decides to remove the convertibility of the gold dollar, killing out of facto the system international currency which rested on this convertibility. One finds in the origins of this dollar crisis of the first steps of a financial globalisation, the existence of American dollar whose government states-unien had lost control.

According to the case, one called them the Euro-dollars or the Pétrodollar S. They were American currencies held by the banks of the countries of Europe or the oil-producing countries. As from the years 1960, the dollar is subjected to a dangerous inflation, in particular related to the financing of the war of Vietnam. When, to guarantee the maintenance of the convertibility of their currency the United States installation drastic measurements, like the prohibition of outflows of capital, the economy world was deprived of its currency of reference. The companies and the financial ones then discovered that the existence of deposit in dollar in the European banks allowed that Ci to create ex-nihilo dollars by the play of the multiplier of credit, making lose at the bank power stations any control on the emission of this currency of reference. The United States having decided to restrict the monetary emission, the world supplied in dollar in the banks offshore oil rig .

Euro-dollars with the debt of the Third world

The suppression of the convertibility of the dollar, symbolic system of the end of the economic system of Bretton Woods was also the reason of the oil crisis of 1973 which completed to conclude the half quarter from high growth that the countries developed since the end of the Second world war had known.

Vis-a-vis the loss in value of the dollars, and in a context of war in the Middle East, the oil-producing countries of this area organize a big rise of the black, known ransom price since under the name of oil crisis. This economic shock have like effect to slow down considerably the volume of the investments in the developed countries. The Investment banks holders of Euro-dollar, for number of them established in City of London, had to find new outlets to make bear fruit their money, this one being then used to grant important appropriations the States of the countries in the process of development, according to the idea that a State offers a certainty of refunding. These massive and little controlled loans carried out of the 1982 Mexico to be declared in a situation of insolvency, first demonstration of what was to become the crisis of the debt of the Third world