Collapse of globalization and the first World War
In this essay I will explain the main reasons for the collapse of the first globalization and as the First World War was a determining factor, but as well as the effects of globalization itself they can be an important factor. But before reaching this point it is important to clarify some concepts and ideas to understand the causes of this collapse, among them are, which is globalization, which characterizes it, the necessary conditions to be carried out and the positive consequences generatedAnd it continues to generate for humanity, and finally in which period the first globalization was given.
Globalization is the process through which there is an never before seen from commercial, capital, services, people and technologies among the different countries of the world. Generating a convergence in prices worldwide, the integration of product markets and the labor market on a global scale, thus the different countries produce the goods and services in which they are more efficient, that is to say those that produce with greater quality andlower price (comparative advantage) and can take advantage of the great demand that is worldwide through trade. The main characteristic of this phenomenon is the free movement of all the factors mentioned around the world.
One of the main causes that this phenomenon occurred was the great advance in the transport mechanisms that occurred in Europe in the fifteenth century, which facilitated the free movement of goods. On the other hand, as is expected toMigration, eliminating taxes and regulations that hinder competitiveness and innovation within the country. In other words, globalization is contrary to protectionism and nationalism.
The first globalization began with the development of the industrial revolution, after 1820 is when it begins according to most historians, however, between 1500 and 1820 international trade was already beginning to move forward with the colonization of America, India and someAfrican countries by Europeans, which imported exotic products from these places that did not occur in Europe. But it is not after the industrial revolution with the great technological advances in the transport and independence of several countries of America (United States) that truly begins free trade around the world. Finally, this first stage of globalization ends in 1914 with the beginning of World War I.
As expected, globalization is a process that although it is beneficial for most long -term people, there are groups that oppose it because they are harmed when they go from protectionist economies, which usually benefit aminority, to free market economies. It is for this reason that the globalization itself and the effects that she entails can harm it, as O’Rourke said "History shows us that globalization can plant the seeds of their own destruction".
As O’Rourke mentions in his work, globalization usually has very important repercussions on the distribution of income in countries, and as a consequence of this redistribution, political and social reactions can arise that oppose the phenomenon. These two authors give as an example several situations that I will explain in short and more generally, the first one has to do with the fact that if it passes from an economy that does not trade with other countries to one that does, the foreign products that arecheaper and better quality (which benefit all consumers) will displace local products from the market, destroying jobs in the sector in question, they put as an example the invasion of the cheap cereal from the United States and UkraineTo Europe, and show how tariffs in these products were very high in some countries that implemented protectionist policies in that sector such as Germany.
The other case is that of migrations and the labor market, having free movement of people with the beginning of globalization, several countries and sectors are harmed, since, with the massive arrival of foreign workers, premises usually loseits jobs and see their salaries affected by an increase in labor offer. In response to this, countries often put hinders to free migration. As Harold James mentions, the root of the collapse of the first globalization is at the birth of nationalist processes, which can be observed in social movements in the United States, whose campaign against immigration led the first laws against it, in the elevation ofcommercial barriers, or in the career of competitive devaluations for which each country tried to export unemployment to its commercial partners, with the only consequence that was the impoverishment of all of them.
But despite these obstacles that some countries put, the first globalization has hardly collapsof humanity, and with them the increase in life expectancy at birth of 30-40 at the beginning of the 19th century passes to 50-65 at the beginning of the 20th century. Therefore, these effects generated by globalization itself cannot be the explanation of its collapse, but rather a small cause of this, which led to nationalist and protectionist movements that triggered the First World War, it should be noted that this does not wantTo say that globalization has been the cause of war, but as Enriqueta Camps describes in his book World Economic History during this globalizing time there were many interests by European countries to have colonies and control territories in Africa and Asia mainly, toTo get the most out of the great wealth generated by free trade, consequent. In the following paragraphs it will be explained how the war clearly affects free trade and data from the decline of said process will be shown in the course of this.
As the author mentioned above says in his work, World War I “interrupted a process of globalization and growth initiated in the West after the end of the Napoleonic wars… instead, from the First World War this process is rolled back."Obviously the war in general is opposed to globalization and the necessary principles for it to be carried out, such as the free market, because a war implies that countries cannot trade freely among them, since this clearly benefitsThe participants of the process and in a World War. For example, if before the war the country to freely traded its agricultural products with the country B, clearly in full conflict this will be prohibited to harm the rival. And being the world’s war, international trade suffered an impressive fall in a very small period of time as will be shown below. Another aspect of globalization that is clearly harmed by the beginning of the war are migrations, as expected by citizens of one country will not go to another with which they are at war.
As can be seen in the picture and in the graphics that are previously shown the main aspects that characterize globalization such as capital movement, worldwide trade or migrations, had a dry stand and an overwhelming decline not onlyDuring the war stage, but also the later years, since the war leaves very important sequelae in the economy and in the worldwide confidence, making the return process, towards the same levels of globalization of the 1913- years-1914 was very slow and did not reach this point until after World War II.
This is why World War I, as described by the three authors Graff, Kenwood and Lougheed of the book Growth of the International Economy 1820-2015, was responsible for the intensification of protectionism and the anti-globalizer movement of the interwar period. They explain that this conflict affected the entire structure of the international economy, and the trade patterns that had previously changed completely, diverting the productive structure of the countries by the war, for this reason after the armed confrontation the tariffs were supported by several nations as national security measures to protect local producers, who had returned to sectors in which they had no comparative advantage (due to the blockade of the war) to cover these markets at the local level. And they put several examples of the increase in protectionism, such as in Italy that tariffs imported in 1925 were applied, or in Britain in 1915 a 33.33 percent tariff was applied in foreign cars, motorcycles and other manufactures. All these and many more with the justification of reducing the dependence of international trade (especially in food and industrial matters), as a forecast against another conflict worldwide.
Another author who defends this position is Niall Ferguson (2005, pp. 68-69), History professor at Harvard, explains in an article published by the university where he teaches, that among the causes of the sinking of the first globalization, are the aforementioned factors, one of them is that this process of freeCommerce generates wealth and the countries that had more colonies were more benefited than those that were not, for this reason it was among the interests of the Germans to occupy territories of the British and the French. He also mentions that globalization can generate many groups of people who put themselves to it, and sets as an example revolutionary terrorist organizations that attack capitalism and free trade such as Bolsheviks, this aspect is related to the redistributive character generated by globalization and thatThere are people who are harmed in the short term by this phenomenon.
In conclusion, the first globalization ends with the beginning of World War I in 1914, and during this the process it decreases significantly. In later years and in the interwar period the recovery was slow due to the emergence of nationalist groups and protectionist policies that remained as sequelae of the war conflict. On the other hand, it cannot be said with certainty that the effects (previously explained) that brought with it globalization were the direct causes of the war, but it is clear on the one hand that there were interested groups, due to their lack of competitiveness and adaptation to the adaptation to theNew economic order, in which free trade was not carried out because it harmed them, and on the other hand, that at the time before the war countries had economic interests to exploit other territories in order to take advantage of the benefits that globalization providesThrough free trade.
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