The Making of a Global World

1. Chapter at a Glance

Globalisation — an economic system that has emerged in recent decades with flows of goods, capital, people and ideas across the world — has a long history. Traders, travellers, priests, pilgrims and soldiers carried goods, money, values, skills, ideas, inventions, germs and diseases across great distances for thousands of years. This chapter traces the making of a global world in three phases: the pre-modern world, the nineteenth century (1815–1914), and the inter-war economy and post-war rebuilding.

2. The Pre-modern World

• As early as 3000 BCE an active coastal trade linked the Indus valley civilisations with present-day West Asia. Cowries (Maldivian shells used as currency) found their way to China and East Africa.
• Silk routes: land and sea routes linking Asia with Europe and northern Africa, existing since before the Christian era and thriving until about the 15th century. Chinese silk cargoes went west; pottery, textiles and spices from India and South-East Asia moved too; precious metals — gold and silver — flowed from Europe to Asia. Buddhism emerged in eastern India and spread through these routes; early Christian missionaries and later Muslim preachers travelled them.
• Food travels: noodles may have travelled west from China to become spaghetti (or Arab traders took pasta to Sicily). Many common foods — potatoes, soya, groundnuts, maize, tomatoes, chillies, sweet potatoes — came from the Americas after Christopher Columbus reached there. In Europe the potato let the poor eat better and live longer; Ireland's poorest peasants depended so much on it that when disease destroyed the crop in the mid-1840s, hundreds of thousands died of starvation in the Irish Potato Famine (1845–49).

Conquest, disease and trade

From the 16th century, after European sailors found a sea route to Asia and crossed the western ocean to America, the pre-modern world shrank greatly. America's vast lands, crops and minerals — especially silver from mines in present-day Peru and Mexico — enhanced Europe's wealth and financed its trade with Asia. The Portuguese and Spanish conquest of America was helped not by superior firepower so much as by germs such as smallpox, which Europeans carried and to which America's original inhabitants had no immunity; smallpox proved a deadly killer that wiped out whole communities. Until the 18th century, China and India were among the world's richest countries and pre-eminent in Asian trade; from the 15th century China restricted overseas contact, and Europe's centre of world trade shifted westwards.

3. The Nineteenth Century (1815–1914)

A world economy takes shape

• In Britain, population growth increased demand for food grains. Under pressure from landed groups, the government restricted imports of corn through the Corn Laws. Industrialists and urban dwellers, unhappy with high food prices, forced their abolition. Cheaper imported food flooded Britain; many British farmers could not compete, and vast areas went uncultivated while people migrated to cities or overseas.
• To meet British demand, lands were cleared and food production expanded in Eastern Europe, Russia, America and Australia, needing railways, ports, homes and settlers. Nearly 50 million people emigrated from Europe to America and Australia in the 19th century; about 150 million people are estimated to have left their homes worldwide in search of a better future.
• In west Punjab, the British Indian government built a network of irrigation canals to turn semi-desert wastes into fertile land growing wheat and cotton for export — the "canal colonies", settled by peasants from other parts of Punjab.

Role of technology

Railways, steamships and the telegraph transformed the world economy. Before the 1870s, animals were shipped live from America to Europe and slaughtered there; then refrigerated ships allowed meat to be transported frozen, cutting costs and lowering meat prices in Europe. The poor could now eat a more varied diet; better living conditions promoted social peace at home and support for imperialism abroad.

Late-19th-century colonialism

Trade flourished and markets expanded, but there was a darker side: in many parts of the world it meant loss of freedom and livelihoods. In 1885 the big European powers met in Berlin to complete the carving up of Africa among themselves, drawing straight-line boundaries. Britain and France made vast additions to their territories; Belgium and Germany became new colonial powers; the USA also became a colonial power after taking over colonies once held by Spain.

Indentured labour migration from India

• In the 19th century hundreds of thousands of Indian and Chinese labourers went to work on plantations, in mines and in road and railway construction around the world. Indentured labour was bonded labour under a contract to work for an employer for a specific time, to pay off passage to a new country or home.
• Most Indian indentured workers came from present-day eastern Uttar Pradesh, Bihar, central India and the dry districts of Tamil Nadu, where cottage industries declined, land rents rose and lands were cleared for mines and plantations.
• Destinations: the Caribbean islands (mainly Trinidad, Guyana and Surinam), Mauritius, Fiji, Ceylon and Malaya; Assam's tea plantations at home.
• Recruitment by agents was often through false information about destinations, work and conditions; sometimes workers were even abducted. Living and working conditions were harsh, with few legal rights. The new system has been described as a "new system of slavery".
• Workers developed new forms of cultural expression: in Trinidad the annual Muharram procession became a riotous carnival called "Hosay"; the protest religion of Rastafarianism (made famous by Bob Marley) is said to reflect social and cultural links with Indian migrants; "chutney music" popular in Trinidad and Guyana is a creative contemporary expression of the post-indenture experience. Nobel laureate V.S. Naipaul and cricketers Shivnarine Chanderpaul and Ramnaresh Sarwan are descendants of indentured workers.
• Indian nationalist leaders opposed the system as abusive and cruel; it was abolished in 1921.

Indian entrepreneurs abroad and India's trade

Groups such as the Shikaripuri shroffs and Nattukottai Chettiars financed export agriculture in Central and South-East Asia using their own funds or borrowed from European banks; Hyderabadi Sindhi traders set up flourishing emporia at busy ports worldwide. Meanwhile, Indian cotton textile exports to Britain fell as Britain imposed tariffs to protect its industry and British manufacturers sought overseas markets; Indian textiles faced competition. From the 19th century, India's exports were mainly raw materials and food — raw cotton, opium (to China), wheat and indigo. Britain had a trade surplus with India, which helped it balance its deficits with other countries; India's surplus with other countries was used to pay "home charges" — private remittances home by British officials and traders, interest on India's external debt, and pensions of British officials in India.

4. The Inter-war Economy

Wartime transformations

The First World War (1914–1918) was fought between the Allies (Britain, France, Russia; later the US) and the Central Powers (Germany, Austria-Hungary, Ottoman Turkey). It was the first modern industrial war — machine guns, tanks, aircraft and chemical weapons on a massive scale; about 9 million were killed and 20 million injured. Industries were restructured to produce war goods; Britain borrowed large sums from US banks, turning the US from an international debtor into a creditor.

Post-war recovery and mass production

Britain, the world's leading economy, faced a long crisis: India and Japan had developed their own industries while Britain was busy with war, and Britain was burdened with huge external debts. The US recovered quickly. A well-known pioneer of mass production was the car manufacturer Henry Ford, who adopted an assembly line at his Detroit plant (from the Chicago slaughterhouses) — the T-model Ford became the world's first mass-produced car. To retain workers on the monotonous line, Ford doubled the daily wage to $5 in January 1914. Mass production lowered costs and prices; US homes bought refrigerators, washing machines, radios and gramophones, many through hire purchase (credit repaid in instalments).

The Great Depression (1929 – mid-1930s)

Most parts of the world experienced catastrophic declines in production, employment, incomes and trade. Causes: agricultural overproduction — falling prices led farmers to produce more to maintain incomes, pushing prices down further; and many countries had financed investments through loans from the US — when US lenders panicked in 1928 and withdrew loans, European banks collapsed and countries faced crises. The US doubled import duties, dealing another blow to world trade. Banks foreclosed homes, farms and businesses; consumer goods sales fell.

5. Rebuilding a World Economy: The Post-war Era

The Second World War (1939–1945) was fought between the Axis powers (Nazi Germany, Japan and Italy) and the Allies (Britain, France, the Soviet Union and the US). At least 60 million people — about 3% of the world's 1939 population — are believed to have been killed, directly or indirectly, and many more injured; more civilians died than soldiers.

• Post-war reconstruction was shaped by the US emerging as the dominant economic, political and military power, and the dominance of the Soviet Union.
• Lessons drawn: an industrial society based on mass production needs mass consumption, which requires high, stable incomes — so governments should minimise fluctuations in prices, output and employment; and economic stability needs links with the outside world.
• Bretton Woods Conference (July 1944, New Hampshire, USA) set up the International Monetary Fund (IMF) to deal with external surpluses and deficits of member nations, and the International Bank for Reconstruction and Development (World Bank) to finance post-war reconstruction. Both began financial operations in 1947. Decision-making was controlled by the Western industrial powers; the US has an effective right of veto over key IMF and World Bank decisions.
• The Bretton Woods system rested on fixed exchange rates: national currencies were pegged to the US dollar, and the dollar was anchored to gold at a fixed price of $35 per ounce.
• This system ushered in an era of unprecedented growth of trade and incomes for Western industrial nations and Japan — the "golden age" (1950s–1960s).

Decolonisation and the end of Bretton Woods

Many former colonies became independent after the war but faced poverty and lack of resources. The IMF and World Bank shifted attention to developing countries in the late 1950s. Most developing countries did not benefit from the fast growth of the Western economies, and organised as the Group of 77 (G-77) to demand a New International Economic Order (NIEO) — real control over their natural resources, more development assistance, fairer prices for raw materials, and better access to markets in developed countries. From the 1960s the rising costs of overseas involvements weakened the US dollar, and the fixed exchange rate system collapsed in the early 1970s, giving way to floating exchange rates. Multinational corporations (MNCs) expanded worldwide; industrial production shifted to low-wage Asian countries, and China became a major manufacturing hub. India, China and Brazil underwent rapid economic transformation — the globalisation we know today.

6. Master Table: Key Terms

7. Master Summary Table

Chart — people who left Europe for America and Australia in the 19th century (approx.):

8. Mind Map

9. Tips and Tricks

10. Important One-liners

• Cowries were used as currency in ancient trade.
• Potatoes, chillies and maize came from the Americas.
• The Irish Potato Famine occurred in 1845–49.
• Europe partitioned Africa at Berlin in 1885.
• Rinderpest killed about 90% of Africa's cattle.
• Hosay is a carnival form of Muharram in Trinidad.
• Indentured labour was abolished in 1921.
• Henry Ford introduced the assembly line in Detroit.
• India's foreign trade nearly halved between 1928 and 1934.
• The Bretton Woods conference was held in July 1944.
• The dollar was pegged to gold at $35 an ounce.

11. Previous-Year-Pattern Questions with Detailed Answers

12. Quick Revision Summary