Globalization is the reality in which we all have lived since our brains were capable of recording memories: generations have grown to nourish the fruits of the advanced interconnectivity of countries, societies and humans on a worldwide scale.
Looking at the dictionary the term “globalization” couldn’t be of better explication:
“the process by which businesses or other organizations develop international influence or start operating on an international scale”.
Globalization in short, points to the whole effort towards making the world global community as one village so, after centuries of technological progress and advances in international cooperation, the world is more connected than ever.
But we are undeniably more reliant and dependent on one from the other.
And that present some deeply concerning problems, aggravated by extra factors, such as the current conflict between Ukraine and Russia.
Globalization: a process driven by technological advancements, transportation and international cooperation
Since the dawn of time, humans have sought distant places to settle, produce, and exchange goods enabled by improvements in technology and transportation.
But not until the 19th century did global integration take off.
Following centuries of European colonization and trade activity, that first “wave” of globalization was propelled by steamships, railroads, the telegraph, and other breakthroughs, and also by increasing economic cooperation among countries — which aided the process by lowering tariffs among commerce parties as shown in the graph below:
The globalization trend eventually slowed down and crashed in the catastrophe of World War I, followed by postwar protectionism, the Great Depression, and World War II.
After World War II in the mid-1940s, the United States led efforts to revive international trade and investment under negotiated ground rules, starting a second wave of globalization, which remains ongoing, though buffeted by periodic downturns and mounting political scrutiny.
Effects of Globalization
It goes beyond recognition that the process of globalization has brought huge advancements to the world at large and affected many demographic segments of society.
Positive effects of the process could be identified as:
1)A GLOBAL, BORDERLESS MARKET
The history of some of the most successful companies is the result of the privatization of state-owned industries — industries which goal was to increase consumer demand via expanding their value chain on an international level. This allows the companies to have access to a bigger consumer base, de-facto turning into multinational corporations and expanding their area of influence in various markets around the globe.
2) SCALED UP BUSINESSES
Larger markets enable companies to reach more customers and get a higher return on the fixed costs of doing business, like building factories or conducting research. Technology firms have taken special advantage of their innovations this way.
3) MORE GOODS AT LOWER PRICES
Globalization encourages each country to specialize in what it produces best using the least amount of resources, known as comparative advantage. This concept makes production more efficient, promotes economic growth, and lowers prices of goods and services, making them more affordable especially for lower-income households.
4) COMPETITION: STRIVING FOR BETTER QUALITY AND VARIETY
Competition from abroad drives firms & companies to improve their products which, as a result, favor the final customer, enjoying a better quality and more efficient product to satisfy his/her needs.
Customer service and the ‘customer is the king’ approaches to production have led to improved quality of products and services, making compelling for companies to be competitive and constantly raise their standards in order to survive in the market.
5) INNOVATION & TALENT CREATION/SHARING
Expanded trade spurs the spread of technology, innovation, and the communication of ideas. The best ideas from market leaders spread easier also allowing highly educated and wealthy individuals to interact within an open environment — fostering the spreading of knowledge and information, leading to the development of a new, highly skilled class of professionals.
6) ACCESS TO EDUCATION: the catalyst for advancements
Globalization has increased access to higher education example universities and reduced the knowledge gap in developing countries, it equally has negative aspects which can seriously threaten universities in those countries. It has indeed brought more positive effects to developing countries through increasing access to higher learning institutions. Today you can move in the search of the best educational facilities in the world including developing countries without any detrimental obstacle. This is due to increased output from secondary schools, greater participation of women in higher education and growing private sector demand for graduates.
7) DEVELOPMENT OF CULTURE
The world that we live in today is a result of several cultures coming together. People of one culture, if receptive, tend to see the flaws in their culture and pick up the culture which is more correct or in tune with the times. Societies have become larger as they have welcomed people of other civilizations and backgrounds and created a whole new culture of their own. Cooking styles, languages and customs have spread all due to globalization. The same can be said about movies, musical styles and other art forms.
8) MORE SCRUTINY ON HUMAN RIGHTS
Globalization tends to promote openness and information along with exchange with greater democracy and prosperity. Increased media coverage also draws the attention of the world to human rights violations — improving human rights evaluation and overall awareness.
Despite all the positive waves of change and improvements in our lives, globalization has also produced some negative side-effects in many countries around the globe, most notably in developed nations:
- JOB INSECURITY, DISPLACEMENT & RISING UNEMPLOYMENT
Globalization provides a double-edged sword when it comes to jobs.
In short, globalization takes jobs from one country and provides them to another. This is because the manufacturing work is outsourced to countries where the costs of manufacturing goods and wages are lower than in their countries. Bigger factors than trade that drive job displacements are labor-saving technologies, like automated machines and artificial intelligence. - EXPLOITATION OF LABOR
Globalization has led to exploitation of labor: safety standards are ignored to produce cheap goods in order to remain competitive in the market and lower the products cost-basis. - FLUCTUATION IN PRICES
Due to the increase in competition, developed countries are forced to lower their prices for their products, this is because other countries like China produce goods at a lower cost that making goods to be cheaper than the ones produced in developed countries. So, in order for the developed countries to maintain their customers, they are forced to reduce the prices of their goods. This is a disadvantage to them because it reduces the ability to sustain social welfare in their countries. - ENVIRONMENTAL DAMAGE
Globalization has led to increased production for businesses in order to meet global demand. Increased production means more natural resources are used and this can be used up before they are regenerated leading to a negative impact on the environment. This situation, which damages are trending towards irreversibility, is furtherly worsening in developing countries where rules and regulations on environmental protection are not as strict as in developed countries. This has seen some multinationals leave their countries to set up in developing countries to take advantage of this lax regulation in the process they manufacture products that are harmful to the environment. - DECLINE IN INEQUALITY GLOBALLY
(but the wider gap in advanced economies — particularly in the U.S.)
Globalization has helped narrow inequality between the poorest and richest people in the world, with the number living in extreme poverty cut by half since 1990.
But within many countries, including the United States, inequality is rising.
A leading explanation for rising US inequality is that technology is reducing demand for certain low- and middle-wage workers and increasing demand for high-skilled, higher-paid workers. Wages have also stagnated, though economists are still debating the exact causes. Countries exposed to globalization have alleviated inequality to different degrees through tax and welfare systems. The United States has done the least among advanced economies to mobilize government policies to reduce inequality and it seems the trend ain’t going to be addressed anytime soon.
WAR: a powerful catalyst for irreversible changes
Wars, since the beginning of time, sweep away convictions, calculations and forecasts. The war in Ukraine, if it was needed, has erased the myth of globalization. Vladimir Putin, who almost “shrugs” — as a sign of clear disinterest — in the face of the United States’ decision to expel Russia from the International Monetary Fund (IMF) and the World Trade Organization (WTO), is the image of a change of epoch: the truth is that being expelled from the globalized world did not frighten the Tsar to the point of forcing him to end the war.
Perhaps for the West, which has relied on this process to dominate the world or, better, to export democracy and its way of life, it is time to look at itself in the mirror, since the largest country on earth is now “out”.
The question then is:
“has globalization worked? Has it been useful?”
On an economic level, it has exalted the big companies, which have reached planetary dimensions, not the citizens of Western nations. The last operation, that of pulling in China, has made the fortune of China itself, not of its promotors.
The objective was to conquer its enormous market and, instead, it was the Dragon that conquered that of other countries.
Even the competition has demonstrated that state capitalism (without political and union rights) is stronger than the capitalism of liberal democracies. What’s more, China’s entry into the global world has not even forced it to respect health targets (see Covid), nor to increase the rate of democracy (ask the students of Hong Kong).
What has been happening in Russia in the last few weeks shows an even worse situation: just think of the mass arrests; of the 15-year sentence for those who tell the country without respecting the regime’s indications; of the end of Aleksej Navalny.
Is Globalization a failure then?
Globalization has not served, and we come to the crucial issue, not even as a tool to safeguard peace.
An interdependent world should resolve conflicts in other ways, certainly not with weapons. The war in Ukraine is the demonstration of failure. Putin doesn’t care to the point of transforming the heart of Europe in a new Syria, even importing jihadists. Moreover, relying on globalization, the West has been found unprepared. Especially Europe, which does not have a common army and suffers from energy dependence on the enemy of the moment. If it had not focused on relations, on trade relations, it would have been more careful about its own autonomy.
The truth is that the process of globalization in the West has followed only one principle only: mercantilism.
Time to mint a new term…
Globalization has not asked the new players for minimum parameters of democracy and freedom, but has only been concerned with opening new markets.
So autocracies have taken, but have not given.
On the contrary, if they had been isolated, their contradictions would have come to the surface: in this way, instead, they would have absorbed part of the Western way of life in order to sedate their citizens, but they have denied their rights — fueling the fire of social and political unrest.
The aforementioned aspect is the reason why “globalization” has to be totally rethought: rules have to be introduced, obligations for those who want to enter the assembly of the international economy in order to avoid that, as a hope to impose democracy on autocracy, it does not have as a consequence its exact opposite.
As the pace of globalization continues to increase, new opportunities and challenges will arise for leaders and communities and will need a common and coordinated response to address the potentially harmful situation and prevent the arise of social division and loss of trust in governments and institutions alike.
At the end of the day, the current “globalization” process has proven to offer little in terms of a truly equal economy, democracy and peace.
“I saw that you could not separate the idea of commerce from the idea of war and peace. … [and] that wars were often largely caused by economic rivalry conducted unfairly. …I embraced the philosophy that…unhampered trade dovetailed with peace; high tariffs, trade barriers, and unfair economic competition, with war. …[I]f we could get a freer flow of trade — freer in the sense of fewer discriminations and obstructions — so that one country would not be deadly jealous of another and the living standards of all countries might rise, thereby eliminating the economic dissatisfaction that breeds war, we might have a reasonable chance for lasting peace.”
Cordell Hull, Secretary of State under
President Franklin D. Roosevelt, written in his memoirs in 1948
End of Part 1
For updates & the latest news and analysis — follow me on Twitter @FilandroMi
Extra Resources:
- Climate Change and its costs:
- Mankind & Energy: a timeless relationship:
- The Nature of Modern Money: living in an inflationary reality:
- Inflation:
- Leverage in the market: how the current inflationary financial system is causing havoc
- A story of leverage, credit control, economic boom & potential failure:
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