Making of a global world

Trade, Cultural Exchange, and the Pre-Modern World

1. Trade and Cultural Exchange:

The Silk Routes facilitated the exchange of goods like Chinese pottery, Indian textiles,
and Southeast Asian spices, while gold and silver flowed from Europe to Asia.
Cultural exchanges occurred alongside trade; Christian missionaries, Muslims, and
Buddhists traveled these routes spreading their religions and ideas.
Buddhism originated in Eastern India and spread widely via intersecting Silk Route
points.
2. Food and Cultural Exchange:
Long-distance trade introduced new crops globally.
Noodles likely traveled from China to Europe, evolving into spaghetti, with Arab
traders introducing pasta to Sicily in the fifth century.
Common crops such as potatoes, maize, tomatoes, and chillies originated from the
Americas and were unknown in much of the world until five centuries ago.
The American Indians were the original cultivators of these foods, discovered by
Europeans after Columbus's voyages.
Dependence on new crops could be lifesaving or disastrous; for example, Ireland’s
reliance on potatoes led to famine when the crop failed in the 1840s.
3. Conquest, Disease, and Trade:
The sixteenth century saw European sailors open sea routes to Asia and the Americas,
dramatically shrinking the pre-modern world.
The Indian Ocean was a bustling hub of trade, where goods, people, knowledge, and
customs intersected.
The Indian subcontinent was central to these exchanges, playing a crucial role in
global networks.

International Economic Exchanges and the World Economy

1. Types of Global Flows:

Trade in Goods: Exchange of commodities like food and raw materials across
countries.
Flow of Labour: Migration of workers in search of opportunities.
Movement of Capital: Investments and funds flowing across financial centres globally.
2. Changing Food Patterns in Industrial Europe:
Industrial growth and population increases in 18th-century Britain raised the demand
and prices of food grains.
Urban industrial centres and trade development led to a shift away from agricultural
self-sufficiency.
3. Corn Laws and Their Impact:
The Corn Laws were tariffs and trade restrictions on imported food, imposed to
protect domestic cereal producers.
 High food prices caused unrest among industrialists and urban populations, leading to
the abolition of the Corn Laws in the mid-19th century.
After abolition, cheaper imported food became available, raising living standards and
supporting Britain’s industrial growth.
4. Global Agricultural Economy Emerges:
Railways connected agricultural regions to ports, enabling global food transportation.
New harbours were built, settlements established, and capital and labour invested to
bring more land under cultivation.
Large-scale migration took place:
Around 50 million Europeans moved to America and Australia in the 19th century.
Globally, 150 million people emigrated in search of better opportunities.
5. Result by 1890:
A global agricultural economy was established.
Food was now grown by agricultural workers on large-scale farms, transported by
railways and ships, and traded internationally.

Changes Brought by 19th-Century Globalization in Punjab and Beyond

1. Transformation in Punjab:
The British Indian government built a network of irrigation canals to convert semi-
desert regions into fertile agricultural lands.
Punjab became a major producer of wheat and cotton for export.
Cotton cultivation expanded globally to meet the demand of British textile mills.
2. Role of Technology in Globalization:
Inventions like railways, steamships, and the telegraph revolutionized transport and
communication.
Faster railways, lighter wagons, and larger ships reduced transportation costs and
improved trade efficiency.
Refrigerated shipsenabled the long-distance transport of perishable goods like meat,
reducing costs and increasing availability.
Before refrigeration, live animals were transported, causing high shipping costs
and losses due to animal deaths.
With refrigeration, meat prices dropped, allowing the European poor to afford a
more varied diet, improving living conditions.

Colonialism and its Impact

1. Expansion of Colonialism:
European powers like Britain, France, Belgium, and Germany expanded their empires
in the late 19th century.
Berlin Conference of 1885: European powers divided Africa among themselves,
creating artificial borders.
The US also became a colonial power in the 1890s by acquiring Spanish colonies.
2. Dark Side of Colonialism:
Colonization caused loss of freedom, livelihoods, and ecological devastation for
colonized societies.
Africa’s natural resources of land and minerals attracted European exploitation.
Rinderpest and African Labour Exploitation

1. The Cattle Plague:

Rinderpest arrived in Africa in the late 1880s, brought by infected cattle imported
from British Asia.
The disease spread rapidly, killing 90% of cattle across the continent.
2. Impact on African Livelihoods:
Loss of cattle devastated African subsistence economies.
Europeans exploited the crisis to force Africans into wage labour on plantations and in
mines.
3. Methods to Enforce Labour:
Imposition of heavy taxes payable only through wage labour.
Restricting land inheritance to a single family member, pushing others to work for
wages.
Movement restrictions on mineworkers to prevent escapes.

Key Outcomes of 19th-Century Globalization:

Punjab became a vital exporter of wheat and cotton.

New technologies enabled long-distance trade and boosted European industrial growth.
Colonized regions like Africa were heavily exploited for resources and labour.
Global markets expanded, but at the cost of widespread social and economic
inequalities.

Impact of Food Grain and Raw Material Exports from India on the British
Economy

1. Trade Dynamics:
India exported significant amounts of food grains and raw materials to Britain and the
global market.
However, the value of British exports to India exceeded the value of Indian exports to
Britain, resulting in a trade surplus for Britain.
2. Use of Trade Surplus:
The surplus was crucial for Britain to balance its trade deficits with other countries,
making India a key player in the 19th-century world economy.
Britain used this surplus to pay for Home Charges, which included:
Private remittances by British officials and traders.
Interest payments on India's external debt.
Pensions for British officials who had served in India.

The Inter-War Economy and Global Transformations

World War I (1914-1918)

1. Scale of Warfare:
The first modern industrial war utilized advanced weaponry, including machine guns,
tanks, aircraft, and chemical weapons.
 9 million people died, and 20 million were injured.
2. Economic Restructuring:
Industries shifted focus to war-related goods production.
Societies were reorganized, with women entering the workforce to replace men sent
to battle.
3. Impact on Global Trade:
Economic links between major powers were severed.
The war transformed the US into an international creditor, as nations like Britain
borrowed heavily from it.

Post-War Economic Recovery

1. Challenges for Britain:

Britain struggled to regain dominance in the Indian market and faced tough
competition from Japan internationally.
War expenditures had left Britain with massive debts to the US.
2. Global Economic Crisis:
The end of the war-induced economic boom led to a contraction in production and a
rise in unemployment (e.g., 1 in 5 British workers was unemployed by 1921).
Overproduction of wheat during the war (Canada, the US, Australia) and revived
production in eastern Europe caused a glut in supply.
3. Consequences:
Falling grain prices reduced rural incomes and pushed farmers into deeper debt.
The economic struggles created ripple effects in both urban and rural economies
worldwide.

Key Outcomes:

India’s exports underpinned Britain’s trade stability and global influence, but at the cost
of local Indian economic development.
World War I and its aftermath disrupted global economic systems, ushering in
widespread unemployment, debt crises, and agricultural overproduction

Rise of Mass Production and Consumption

Mass Production in the 1920s

1. Pioneered by Henry Ford:

Henry Ford revolutionized manufacturing by adapting the assembly line system in his
Detroit car plant, inspired by a Chicago slaughterhouse.
His T-Model Ford became the first mass-produced car, rolling off the assembly line
every three minutes.
2. Impact on Workers:
The high-paced work led to dissatisfaction, with many workers quitting.
In response, Ford introduced a $5 daily wage, doubling workers' pay and creating a
stable workforce despite speeding up production lines.
3. Rise in Consumerism:
 Higher wages enabled workers to purchase durable consumer goods like refrigerators,
radios, and washing machines via hire purchase (buy now, pay later).
A housing boom ensued, fueled by loans, contributing to a new era of prosperity in
the US.

The Great Depression

Causes of the Depression

1. Agricultural Overproduction:
Overproduction caused prices to plummet, leading farmers to expand production
further, worsening the situation.
Excess farm produce rotted due to a lack of buyers.
2. Global Financial Crisis:
Many countries depended on US loans to finance their economies.
As US lenders withdrew loans, it triggered bank failures and currency collapses in
Europe.
3. Protectionist Policies:
The US responded by doubling import duties, stifling global trade and worsening the
depression.

Impact of the Depression on India

1. Trade Decline:
Indian exports and imports halved between 1928 and 1934.
International price crashes led to a severe decline in domestic prices, impacting
farmers and peasants.
2. Peasant Hardships:
Farmers producing for global markets suffered deeply as they fell into debt due to
lower incomes and borrowing for higher yields.
Urban dwellers with fixed incomes benefited from falling prices, making the
depression less severe for cities.
3. Gold Exports:
India became a major exporter of gold, aiding global economic recovery and Britain’s
economy but offering little relief to Indian peasants.

Post-War Reconstruction: The World Economy Rebuilds

Impact of the Second World War

1. Scale of Destruction:
Over 60 million deaths (3% of the world’s population in 1939).
Civilians bore the brunt of casualties, with vast parts of Europe and Asia devastated.
2. Economic and Social Disruption:
Widespread destruction of cities, infrastructure, and economies.

Post-War Influences
 1. US Dominance:
The US emerged as the leading economic, political, and military power in the Western
world.
2. Soviet Influence:
The Soviet Union became the dominant power in Eastern Europe, marking the start of
the Cold War era.

The post-war era laid the foundation for a restructured global economy, shaped by the
competing influences of the US and the Soviet Union.

Post-War Global Economic Developments

The Bretton Woods System

1. Foundation and Objectives:

Established in 1944 at a conference in Bretton Woods, New Hampshire.
Designed to promote stability in international trade and finance after World War II.
Introduced a system of fixed exchange rates, where national currencies were pegged
to the US dollar, and the dollar was convertible to gold.
2. Institutions Established:
International Monetary Fund (IMF): Provided financial stability and short-term loans
to countries facing balance-of-payment crises.
World Bank: Focused on long-term development projects.
Decision-making was controlled by Western industrial powers, with the US having a
veto over critical decisions.
3. Economic Growth (1950–1970):
Trade grew at 8% annually, while incomes rose by 5% annually in Western nations and
Japan.
Stable growth facilitated technological advances and industrial expansion worldwide.

Decolonisation and Challenges for Developing Nations

1. Post-Independence Issues:
Newly independent nations in Asia and Africa faced poverty, resource constraints,
and the effects of prolonged colonial exploitation.
Control over resources often remained with former colonial powers or foreign
corporations.
2. Shift in Bretton Woods Institutions:
From the late 1950s, these institutions focused on developing countries, offering
loans for development but often under conditions favorable to lenders.
3. Formation of Group of 77 (G-77):
Formed to demand a New International Economic Order (NIEO) with equitable access
to resources, development assistance, fair raw material prices, and improved access
to global markets.

The Collapse of Bretton Woods

1. US Economic Struggles:
 Rising overseas military costs (e.g., Vietnam War) and declining confidence in the US
dollar weakened the fixed exchange rate system.
In 1971, the US abandoned the gold standard, leading to the collapse of Bretton
Woods and the introduction of floating exchange rates.

The Shift Towards Globalisation

Developments Post-Bretton Woods

1. Debt Crisis in Developing Nations:

Developing nations increasingly borrowed from private Western banks, leading to
periodic debt crises and rising poverty, especially in Africa and Latin America.
2. Industrial World Challenges:
Industrial nations faced rising unemployment from the mid-1970s to the early 1990s
due to economic stagnation.

Factors Driving Globalisation

1. Economic Reforms in China:

China’s market-oriented reforms opened its economy to foreign investments.
2. Collapse of the Soviet Union:
The dissolution of the Soviet Union in 1991 integrated many Eastern European nations
into the global economy.
3. Attraction of Low-Wage Economies:
Countries like China, offering lower wages, became hubs for foreign direct investment
(FDI) from multinational corporations (MNCs).
4. Relocation of Industries:
The shift of production to low-wage countries stimulated global trade and capital
flows, marking a new phase of globalisation.

The combination of technological advances, economic policy shifts, and the integration of
new markets into the global economy redefined international trade and finance, ushering in a
new era of interconnectedness.