Chapter V 1880-1945: Global Capitalism and Global Crises.

The outbreak of WW I was an era of extensive globalization, followed by a phase of deglobalization that ended only after WW II. This was the result of an increasing ability to communicate across long distances and after 1870, the percentage of both illiterate men and women fell all over Europe, and even more backward regions such as Spain, Russia, and the Balkans. Journalism became established as a profession and journalists as a social group. In China, Japan, Egypt, and Ottoman Turkey, the press flourished in the traditional language. In 1884 twentyfive states agreed to divide the world into a system of time of zones and establish global time based on the Greenwich meridian. Mastery of space and distance influenced the mindsets and attitudes of the age. Period 1789-1914 were not only a period of globalization but also one of territorialization meaning the effort to tie social relations to specifically demarcated political territorial spaces, usually nationstates. By 1913, this system had been adopted almost everywhere. A grand scale of transcontinental steamship spread out and on a smaller case, mobility increased with the help of new inventions such as the bicycle, streetcar, bus, and automobile, and airplane. For many people, globalization first touched their daily lives through the effects of global economic intregation. Since the 1880s at the latest, one spoke of one global economy as an interconnected entity and it is very important to remember three points: 1. The intercontinental flows of labor, capital, and goods were linked with and mutually influenced one another. The export of European capital financed the expansion of the global economic infrastructure. 2. Between 1870-1914 the loosely interconnected trading networks that were usually centered in London consolidated into a unified system. The most important indication of this development is that the balances of trade and payments were now settled multilaterally. 3. The global economy could only function as a coherent system with the help of a welldeveloped infrastructure, which depended on initiatives taken by the nation-states. Since 1870s all important currencies had been based on the gold standard, so that global trade and investment could be conducted without being exposed very much to the risks of inflation and fluctuating exchange rates.

Access to the global economy was not only a source of economic profit but also social status and political power. The industrial West was an area of extraordinarily intense economic interaction in which regional, national, international, and global networks overlapped. However, it would be wrong to assume that globalization in the 19th century established links between coherent, integrated national economies and forced them to adapt. Instead, globalization occurred parallel and simultaneously to state building. How did the two processes influence each other? Particularly important are the political reactions to the consequences of global economic integration. The average annual rate of population growth on earth had doubled during the years 18701913, compared with the period of 1820-1870. Because of that reason, most of the countries reverted to protectionism after 1878 and the first restrictions on immigration were established. In a period of increasing racism, these restrictions were first directed at Asian migrants. The great powers system of the turn of the century did not become global merely because of the inflated scope of European ambitions, but also because new centers of power arose. The RussoJapanese War of 1904-1905 also proved a harsh setback to European expansion and demonstrated that world politics was something other than just the European balance of power projected onto a global scale The complicated constellation of conflict that existed in 1914 would have been unthinkable in a general sense without globalization. The year 1914 became a turning point in the national history of many countries located far from the battlegrounds of the Great War, such as New Zealand, which lost seventeen thousand soldiers from 1914-1918. On the one hand, WW I represented a phase of convulsively intensified interaction. On the other, numerous long-standing networks were destroyed without being replaced by new, stable structures. Trade blockades, internment and confiscation, and attacks on communication facilities and shipping became means of warfare. Many European foreign investments were liquidated in order to finance the war. The monetary system based on the gold standards also broke down, because no state could finance the war without printing more and more paper money. WW I had destroyed the European power system without replacing it with a global one or even a world government. Europe was losing its influence as the supreme collective power in the world. Before 1914 the world had primarily consisted of great imperialistic (usually monarchical) powers, smaller states, and the non-Western, more or less dependent periphery. After the war, even among the great powers there was a confusing variety of roles and political systems. During the war the colonies supplied Europe with resources such as foodstuffs, machines, and raw materials such as rubber that were vital to the war. Obviously, it was the ability to mobilize

resources on a global scale that enabled the Allies to win. Beside that, the war also had given great impetus to anticolonial nationalism everywhere. In nearly all colonies, compulsory labor duties and the intensified production of goods essential to the war had increased the burden and impact of colonial rule. Colonized people were demanding self-determination and modernization everwhere. The multilateral interpendence and division of labor of the global economy had been so permanently rocked by the war that it could not be revived. All of the warring European nations were severely in debt due to the cost of war, the burden of reconstruction and in Germanys case, the reparations it was forced to pay. The world markets were suffering from an insurmountable stagnation of demand, and global trade grew much more slowly than did production. The demand for better-quality consumer goods dropped of everywhere, even in the United States. During the war government authorithies everywhere took over the de facto control of production, prices, and currency, each country began to pursue a national economic policy. The gold standard which had been seen as the most important component of the 19th century had thus become golden fetters. WW II transformed the United States into initiator of economic, political, and cultural trends in globalization during the postwar period. The wars influence in this regard was threefold. First, since entering the war in 1941, the United States had perceived itself as a world power. Second, the warwas a highly ideological and racially laden conflict. The political programs of both sides were used to mobilize support and loyalties that cut across national borders: The German SS recruited people all across the world who were considered Nordic. Third, the ability of American industry to produce the combat and transportation materials needed by the Allied forces was a decisive factor leading to the Allied victory. The end of the war in 1945 represented a global turning point because of the willing of the victors to create a new world order. The experience of worldwide economic crisis and world war meant that this new agenda would be one of global modernization, spearheaded by the United States.