This paper analyzes the historical phenomenon of colonialism and globalization and the similarities in their ideologies. In addition, using examples of nations and multinational corporations, this paper tries to find economic and social connections between colonialism and globalization in the behavior of suppressor and oppressor. Furthermore, the term neo-colonialism is going to be researched and some recent examples of expansion and discrimination in different countries are shown.
Globalization is a form of colonialism that prevents the development of third world countries. Both historical phenomenons share some similarities that I will further investigate in this paper. During the 17th century, powerful countries invented the basic framework of colonialism, which is free trade as I will further investigate. Oppressed countries were forced to consume goods that were brought by their colonialists; in return they gave up their own productivity, this lead to high revenues for the colonialists and exploitation for their colonies.
Today, globalization is criticized for preventing local development in poor countries. This topic relates to the neo-mercantilist strategy, that we considered in chapter 4, to make some statements about the relation between my topic and Global Political Economy. The second part of research in this paper consists of two examples.
Firstly Monsanto has been a good example in explaining how globalization prevents local farmers´ productivity through genetically modified seeds. The Monsanto Company is a controversial multinational agricultural biotechnology corporation. It is the world's leading producer of the herbicide glyphosate, marketed as "Roundup". Monsanto is also the leading producer of genetically engineered (GE) seed; it provides the technology in 90% of the world's genetically engineered seeds. Secondly, Wal-Mart is one of the unethical global businesses that violate human rights during their manufacturing process. The strategy, to give jobs to employees, warranty low prices to consumers and increase shareholders revenues has high costs and needs aggressive practices by the CEO, such as violating a vast array of human rights and exploiting labor.
Colonialism refers to a historical phenomenon in which people conquer people from another territory in order to expand. In this process of sovereignty over the colony, the colonialists changed the social structure, government and the economy. As a result, colonialism generated an unequal relationship between the homeland and the colony. The sovereignty is mostly referred to as an expansion of political influence and control over colonies which are located in Asia, the Middle East, Africa and Latin America. This expansion took place between the 16th and middle of the 20th century. The beginning was marked by Crusaders, such as Christopher Columbus and Amerigo Vespucci who first discovered new territories. At the second stage, the conquistadores Pizarro and Cortes had forced the local community to slavery. This military relation evolved into economic and military control of these regions by the colonialists.
The similar phenomenon nowadays is called neo-colonialism; it represents imperialism in its final stage. Today it isn’t possible to turn a country into a colony by imposing colonialist rules. Most of the colonialist countries attained their independence after WWII. Only a few regions, such as Puerto Rico, Gibraltar or The Falkland Islands are still considered colonial. The essence of neo-colonialism is that the State which is subject to it is, in theory, independent and has all the outward trappings of international sovereignty. In reality its economic system and thus its political policy is directed from outside.
On the other hand, we have another historical phenomenon called Globalization. Globalization describes the process by which regional economies, societies, and cultures have become integrated through a global network of political ideas through communication, transportation, and trade. This integration of regional economies into the international economy is reached by trade, foreign capital investment, and technology. Globalization is also related to economy, technology, socio-cultural factors and politics. The term can also be integrated as the transnational circulation of ideas, languages, or popular culture through cultural diffusion. An aspect of the world which has gone through the process can be said to be globalized. Globalization has various aspects that affect the world in several different ways. The most important dimensions that have been influenced are: industry, finance and the global economy. We can define globalization as an advance towards the “end state” of a fully integrated world market, the creation of a borderless world.
Although there are benefits, a lot of negative consequences occur as a result of globalization. Countries have to reduce their company’s taxes to entice multinational companies to do business in their country. A reduction of tax revenues is followed by a reduction of welfare and public services. Furthermore, most of the developed countries don’t take the environmental costs into consideration. The boom of the oil industry and the demand of cheap energy make countries like Canada dependent on oil revenues to provide a high standard of living for their population. Issues of global warming are getting more and more important in today’s society and the agreements between countries, such as the Kyoto Protocol, are not taken seriously and are proving to be ineffective. Another cost of globalization is ever rising wage inequalities. The gap between skilled and unskilled workers is increasing and the fear of an extinction of the middle class is growing. The strategy of Western governments is to push for more trade, more connectivity, more markets and more openness, because they benefit from globalization more than other countries. Essentially they don’t consider the dark sides of globalization and the negative aspects that don’t impact them directly.
As seen in the definitions, we notice that colonialism and globalization have some very similar ideologies, specifically how the rich countries are trying to expand their power and to exploit other countries in order to get major benefits. But isn’t globalization using structuralism to reach colonialism? For mercantilists, the international economy is an arena of conflict involving opposing national interests, rather than an area of cooperation and mutual gain. The economic competition between states is thus regarded as a ‘zero sum game’; one state’s gain is another’s loss. Additionally, states are wary of other state’s relative economic gain as the material wealth accumulated could be used for establishing military-political power to defend other states. Even if we consider the large amount of advantages which the globalization has brought to all of us, the negative aspects of this phenomenon have resembled aspects of colonialism, which we observed during the 16th-19th century.
Countries such as Great Britain wanted to give wealth to their inhabitants; free trade was one of the means they used to reach that goal. “The end justifies the means”, this Machiavellian quote reflects the imperialist policy of most European countries during the 19th century. Colonialists tried to globalize the world on a unipolar way, taking all the gain of this zero-sum game, exploiting and suppressing their colonies with their military and political power. Nowadays, we can observe a similar incident in African and Asian countries. These countries, mostly governed by dictatorships and indirectly by big western multinationals, exploit recourses and cheap labor of the poorer countries to gain wealth through low production costs.
 The World According to Monsanto, 11 March 2008, "New movie damns Monsanto's deadly sins"
 Bhagwati, Jagdish (2004). In Defense of Globalization. Oxford, New York: Oxford University Press.
“GLOBALISATION” has become the buzzword of the last two decades. The sudden increase in the exchange of knowledge, trade and capital around the world, driven by technological innovation, from the internet to shipping containers, thrust the term into the limelight.
Some see globalisation as a good thing. According to Amartya Sen, a Nobel-Prize winning economist, globalisation “has enriched the world scientifically and culturally, and benefited many people economically as well”. The United Nations has even predicted that the forces of globalisation may have the power to eradicate poverty in the 21st century.
Others disagree. Globalisation has been attacked by critics of free market economics, like the economists Joseph Stiglitz and Ha-Joon Chang, for perpetuating inequality in the world rather than reducing it. Some agree that they may have a point. The International Monetary Fund admitted in 2007 that inequality levels may have been increased by the introduction of new technology and the investment of foreign capital in developing countries. Others, in developed nations, distrust globalisation as well. They fear that it often allows employers to move jobs away to cheaper places. In France, “globalisation” and “délocalisation” have become derogatory terms for free market policies. An April 2012 survey by IFOP, a pollster, found that only 22% of French people thought globalisation a “good thing” for their country.
However, economic historians reckon the question of whether the benefits of globalisation outweigh the downsides is more complicated than this. For them, the answer depends on when you say the process of globalisation started. But why does it matter whether globalisation started 20, 200, or even 2,000 years ago? Their answer is that it is impossible to say how much of a “good thing” a process is in history without first defining for how long it has been going on.
Early economists would certainly have been familiar with the general concept that markets and people around the world were becoming more integrated over time. Although Adam Smith himself never used the word, globalisation is a key theme in the Wealth of Nations. His description of economic development has as its underlying principle the integration of markets over time. As the division of labour enables output to expand, the search for specialisation expands trade, and gradually, brings communities from disparate parts of the world together. The trend is nearly as old as civilisation. Primitive divisions of labour, between “hunters” and “shepherds”, grew as villages and trading networks expanded to include wider specialisations. Eventually armourers to craft bows and arrows, carpenters to build houses, and seamstress to make clothing all appeared as specialist artisans, trading their wares for food produced by the hunters and shepherds. As villages, towns, countries and continents started trading goods that they were efficient at making for ones they were not, markets became more integrated, as specialisation and trade increased. This process that Smith describes starts to sound rather like “globalisation”, even if it was more limited in geographical area than what most people think of the term today.
Smith had a particular example in mind when he talked about market integration between continents: Europe and America. The discovery of Native Americans by European traders enabled a new division of labour between the two continents. He mentions as an example, that the native Americans, who specialised in hunting, traded animal skins for “blankets, fire-arms, and brandy” made thousands of miles away in the old world.
Some modern economic historians dispute Smith’s argument that the discovery of the Americas, by Christopher Columbus in 1492, accelerated the process of globalisation. Kevin O’Rourke and Jeffrey Williamson argued in a 2002 paper that globalisation only really began in the nineteenth century when a sudden drop in transport costs allowed the prices of commodities in Europe and Asia to converge. Columbus' discovery of America and Vasco Da Gama’s discovery of the route to Asia around the Cape of Good Hope had very little impact on commodity prices, they argue.
But there is one important market that Mssrs O’Rourke and Williamson ignore in their analysis: that for silver. As European currencies were generally based on the value of silver, any change in its value would have had big effects on the European price level. Smith himself argued this was one of the greatest economic changes that resulted from the discovery of the Americas:
The discovery of the abundant mines of America, reduced, in the sixteenth century, the value of gold and silver in Europe to about a third of what it had been before. As it cost less labour to bring those metals from the mine to the market, so, when they were brought thither, they could purchase or command less labour; and this revolution in their value, though perhaps the greatest, is by no means the only one of which history gives some account.
The influx of about 150,000 tonnes of silver from Mexico and Bolivia by the Spanish and Portuguese Empires after 1500 reversed the downwards price trends of the medieval period. Instead, prices rose dramatically in Europe by a factor of six or seven times over the next 150 years as more silver chased the same amount of goods in Europe (see chart).
The impact of what historians have called the resulting “price revolution” dramatically changed the face of Europe. Historians attribute everything from the dominance of the Spanish Empire in Europe to the sudden increase in witch hunts around the sixteenth century to the destabilising effects of inflation on European society. And if it were not for the sudden increase of silver imports from Europe to China and India during this period, European inflation would have been much worse than it was. Price rises only stopped in about 1650 when the price of silver coinage in Europe fell to such a low level that it was no longer profitable to import it from the Americas.
The rapid convergence of the silver market in early modern period is only one example of “globalisation”, some historians argue. The German historical economist, Andre Gunder Frank, has argued that the start of globalisation can be traced back to the growth of trade and market integration between the Sumer and Indus civilisations of the third millennium BC. Trade links between China and Europe first grew during the Hellenistic Age, with further increases in global market convergence occuring when transport costs dropped in the sixteenth century and more rapidly in the modern era of globalisation, which Mssrs O’Rourke and Williamson describe as after 1750. Global historians such as Tony Hopkins and Christopher Bayly have also stressed the importance of the exchange of not only trade but also ideas and knowledge during periods of pre-modern globalisation.
Globalisation has not always been a one-way process. There is evidence that there was also market disintegration (or deglobalisation) in periods as varied as the Dark Ages, the seventeenth century, and the interwar period in the twentieth. And there is some evidence that globalisation has retreated in the current crisis since 2007. But it is clear that globalisation is not simply a process that started in the last two decades or even the last two centuries. It has a history that stretches thousands of years, starting with Smith’s primitive hunter-gatherers trading with the next village, and eventually developing into the globally interconnected societies of today. Whether you think globalisation is a “good thing” or not, it appears to be an essential element of the economic history of mankind.
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Hopkins, A. G. (ed.). (2002). Globalization in World History. W. W. Norton.
O’Rourke, K. H., and Williamson, J. G. (1999). Globalisation and History: The Evolution of a Nineteenth-century Atlantic Economy. MIT Press.
O’Rourke, K. H., and Williamson, J. G. (2002). ‘When did globalisation begin?’. European Review of Economic History, 6(1), 23-50.
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