Chapter 3: The Making of a Global World

1. The Pre-modern World

• Globalisation has a long history of trade, migration, and capital movement, connecting societies through travellers, traders, and pilgrims carrying goods, ideas, and diseases.
• Since 3000 BCE, coastal trade linked the Indus Valley with West Asia; cowries from the Maldives reached China and East Africa.
• Disease spread, like germs by the seventh century, became a significant link by the thirteenth century.

1.1 Silk Routes Link the World

• Silk Routes connected Asia, Europe, and North Africa before the Christian Era until the fifteenth century, carrying Chinese silk, Indian textiles, and spices, with gold and silver flowing back.
• Cultural exchanges included Christian missionaries, Muslim preachers, and the spread of Buddhism from eastern India.

1.2 Food Travels: Spaghetti and Potato

• New crops like potatoes, maize, and chillies from the Americas transformed diets in Europe and Asia post-Columbus (sixteenth century).
• Potatoes helped Europe’s poor eat better; Ireland’s potato famine (1840s) caused mass starvation due to crop disease.

1.3 Conquest, Disease, and Trade

• European sailors’ routes to Asia and America in the sixteenth century shrank the world; the Indian Ocean trade redirected flows to Europe.
• Smallpox from Europeans decimated America’s indigenous populations, aiding Spanish and Portuguese conquest.
• Silver from Peru and Mexico boosted Europe’s wealth, financing Asian trade; legends of El Dorado drove exploration.
• By the eighteenth century, African slave-worked plantations in America supplied cotton and sugar to Europe.
• China and India, once rich, saw China’s isolation and America’s rise shift world trade to Europe by the fifteenth century.

2. The Nineteenth Century (1815-1914)

• Three key flows defined the world economy: trade in goods, labour migration, and capital movement, deeply interconnected.

2.1 A World Economy Takes Shape

• Britain’s population growth and industrialisation increased food demand; Corn Laws restricted imports, raising prices, but their abolition allowed cheaper imports.
• British agriculture declined, pushing workers to cities or overseas; 50 million migrated from Europe to America and Australia.
• Global agriculture expanded in America, Australia, and Russia to meet British demand, requiring railways, harbours, and settlements funded by capital from London.
• World trade grew 25-40 times (1820-1914), with 60% in primary products like wheat and cotton.
• In India, Canal Colonies in Punjab transformed semi-deserts into wheat and cotton fields for export.

2.2 Role of Technology

• Railways, steamships, and refrigerated ships enabled faster, cheaper transport of goods like frozen meat from America and Australia to Europe.
• Refrigerated ships lowered meat prices, improving European diets and promoting social peace and imperialism.

2.3 Late Nineteenth-Century Colonialism

• European powers (Britain, France, Belgium, Germany) and the US expanded colonies; the 1885 Berlin Conference divided Africa.
• Colonialism caused economic and social disruption, integrating colonised societies into the world economy at the cost of freedoms.

2.4 Rinderpest, or the Cattle Plague

• Rinderpest (1890s) killed 90% of African cattle, destroying livelihoods and forcing Africans into wage labour on European plantations and mines.
• Heavy taxes, changed inheritance laws, and confined compounds coerced labour; Europeans monopolised scarce cattle to conquer Africa.

2.5 Indentured Labour Migration from India

• Indentured labour from India (Uttar Pradesh, Bihar, Tamil Nadu) went to Caribbean, Mauritius, Fiji, Ceylon, and Assam tea plantations.
• Economic distress (declining cottage industries, high rents) drove migration; agents used deception, and conditions were harsh, resembling a “new system of slavery.”
• Workers blended cultures, creating Hosay, Rastafarianism, and Chutney music; many stayed post-contract, forming Indian diaspora communities.
• Indian nationalists opposed indenture, leading to its abolition in 1921.

2.6 Indian Entrepreneurs Abroad

• Shikaripuri Shroffs and Nattukottai Chettiars financed export agriculture in Asia; Hyderabadi Sindhi traders established global emporia.

2.7 Indian Trade, Colonialism, and the Global System

• British tariffs reduced Indian cotton textile exports from 30% (1800) to below 3% (1870s); raw material exports (cotton, indigo, opium) rose.
• Britain’s trade surplus with India financed its deficits elsewhere, supporting the global economy via a multilateral settlement system.

3. The Inter-war Economy

3.1 Wartime Transformations

• First World War (1914-18): A modern industrial war with 9 million dead, 20 million injured, reducing Europe’s workforce.
• Industries shifted to war goods; women took men’s jobs; Britain borrowed heavily from the US, making the US a global creditor.

3.2 Post-war Recovery

• Britain faced a crisis, losing market dominance to India and Japan, burdened by US debts; unemployment hit 20% in 1921.
• Agricultural overproduction (e.g., wheat) caused price falls and rural debt after eastern Europe resumed production.

3.3 Rise of Mass Production and Consumption

• US recovery driven by mass production; Henry Ford’s assembly line (T-Model Ford) lowered car costs, raising production from 2 million (1919) to 5 million (1929).
• High wages and hire purchase fuelled consumer goods demand; US capital exports boosted global trade.

3.4 The Great Depression

• Great Depression (1929-mid-1930s): Caused by agricultural overproduction, falling prices, and US loan withdrawals (from $1 billion in 1928 to a quarter in 1929).
• US banks collapsed (4,000 by 1933), 110,000 companies failed; unemployment soared, ruining households.
• US doubled import duties, crippling world trade; Europe saw bank failures and currency collapses.

3.5 India and the Great Depression

• India’s exports and imports halved (1928-1934); wheat prices fell 50%, jute prices crashed 60%, increasing peasant debt.
• Colonial government’s high revenue demands worsened rural unrest, fueling Gandhi’s Civil Disobedience Movement (1931).
• Urban fixed-income groups benefited from lower prices; industrial investment grew with tariff protection.

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

4.1 The Second World War

• Second World War (1939-45): 60 million killed, mostly civilians; caused economic and social devastation.
• US emerged as the dominant Western power; Soviet Union became a world power.

4.2 Post-war Settlement and Bretton Woods Institutions

• Bretton Woods Agreement (1944): Established IMF and World Bank to ensure economic stability and full employment via fixed exchange rates (dollar pegged to gold at $35/ounce).
• US dominated decision-making in these institutions.

4.3 The Early Post-war Years

• 1947-1970: Stable growth with 8% annual trade growth, 5% income growth, and low unemployment in industrial nations.
• Developing countries imported modern technology to catch up.

4.4 Decolonisation and Independence

• Post-1945, Asian and African colonies gained independence but faced poverty and resource scarcity.
• Bretton Woods institutions shifted focus to developing countries from the late 1950s, but former colonial powers and US corporations controlled resources.
• G-77 (Group of 77) formed to demand a New International Economic Order (NIEO) for resource control and fair trade.

4.5 End of Bretton Woods and the Beginning of Globalisation

• 1960s: US dollar weakened, leading to the collapse of fixed exchange rates and adoption of floating rates.
• 1970s: Developing countries faced debt crises from private bank loans; unemployment rose in industrial nations.
• MNCs shifted production to low-wage countries like China, stimulating trade and capital flows.
• China, India, and Brazil transformed economically, reshaping global economic geography.