Historical Analysis of the Cyclical Phases of the First Globalisation
Based on a lecture by Michel Oris[1][2]
The first wave of globalization, which took shape from the mid-19th century onwards, represents a period of radical transformation in the history of human interaction and international trade. This era can be characterized by three distinct phases: firstly, from 1850 to 1872, we witness a major upheaval in economic and social systems, with Europe, then at the height of its power, becoming the central pivot of dazzling economic growth and significant social advances. Subsequently, the period from 1873 to 1890 was marked by stagnation, with a deep crisis affecting both agriculture and industry, reflecting the limits and imbalances of economic development at the time. Finally, from 1890-95 until the outbreak of the First World War in 1914, renewed economic growth coincided with the intensification of international tensions.
This era of early globalization was marked by unprecedented technological progress and innovation, which led to the gradual erosion of physical and economic frontiers, although market integration remained uneven. Europe, while at the center of this global dynamic, failed to maintain its unity, eventually collapsing in the fratricidal conflict of the Great War, while the United States began its ascent.
The liberalization of trade, illustrated by the retreat of protectionism, the expansion of the rail network and the revolution in maritime transport with steamboats, paved the way for an intensification of trade. The laying of transatlantic telegraph cables facilitated almost instantaneous communication, accelerating the pace of business and financial life, making the world more interconnected than ever. We delve into an analysis of this nascent globalization, its causes, development and consequences, exploring how technological innovations and the flow of people, money, goods and information have reshaped the world's economic and social landscape, setting the stage for the contemporary dynamics of our current globalization.
The Three Phases of Business Cycle Dynamics[modifier | modifier le wikicode]
Globalization is a complex process of worldwide economic integration, which has unfolded unevenly across the globe. While markets have become increasingly interconnected, some players, such as Europe, have seen their influence and economic power grow considerably. This gradual, albeit uneven, integration has led to a dilution of traditional economic boundaries, and can be divided into three major historical phases.
The first phase, from 1850 to 1872, marked a fundamental break with the past. It was an era of radical transformation, which saw the world shift from traditional organization to a modern, progress-oriented system. The explosion in economic growth and social advances of this period testify to industrial revolutions that profoundly altered modes of production and social relations, laying the foundations for an integrated world order.
The second phase, from 1873 to 1890, was characterized by a marked slowdown in the previous economic expansion. This period was overshadowed by a widespread crisis, affecting both industry and agriculture, particularly in Europe. The repercussions of this depression led to economic stagnation, imposing significant structural adjustments and reflecting the vulnerability of economies to global market fluctuations.
The third phase, which began between 1890-95 and lasted until the eve of the First World War in 1914, was an ambiguous period marked by a return to economic growth, but also by a rise in international tensions. Growing disparities between nations and increased competition for resources and markets set the stage for a climate of discord that would eventually lead to conflict on a global scale. This period highlights the precarious, conflict-ridden nature of global economic interdependence.
Thus, by examining these three phases, it is possible to grasp the evolution and dynamics of globalization, with its ups and downs, its periods of dazzling progress and its moments of crisis and tension. This illustrates the need to consider globalization as a multi-dimensional phenomenon, affecting far more than just economic spheres, profoundly influencing the organization and cohesion of societies worldwide.
Draft of Globalization: A Progressive Emergence[modifier | modifier le wikicode]
The period that marks the beginnings of the first globalization is often seen as one in which economic frontiers begin to gradually disappear, giving rise to the transnational integration of markets and trade. However, this characterization needs to be qualified. While, on the one hand, the late 19th and early 20th centuries saw an unprecedented expansion of commercial and financial networks on a global scale, this era was also one in which nations and empires intensified the process of consolidating their national and imperial identities. This duality is clearly evident in the various dynamics of the period. On the one hand, technological advances, particularly in transport and communications, were shrinking distances and connecting markets, enabling goods, capital and people to circulate with unprecedented ease. The introduction of the telegraph, the opening of strategic canals such as the Suez, and the spread of steam power were catalysts for this economic interconnection. On the other hand, the era was marked by a surge of nationalism and the formalization of state structures. The great colonial powers competed for overseas territories, thus establishing the division of the world between empires. This phenomenon was also accompanied by protectionist policies and the emergence of economic doctrines favoring national industrialization and the safeguarding of each nation's own interests. It was against this complex and sometimes contradictory backdrop that the first globalization took shape, oscillating between openness and closure, international cooperation and imperial competition. This first act of globalization was to establish itself as a key moment in world economic history, laying the foundations for modern international trade while highlighting the limits and contradictions inherent in the process.
Impulses and Precursors of Global Interdependence[modifier | modifier le wikicode]
Early globalization was strongly influenced by the decline of protectionism, a movement that took place for a variety of intertwined and complex reasons. Originally, protectionism served as a shield for national economies, safeguarding them through tariffs that made imports more expensive and thus protected local producers from foreign competition. However, this dynamic began to reverse as the 19th century progressed, under the influence of several combined forces. Internal political and economic pressures, often driven by producers eager to expand their markets and by consumers in search of diversity and lower prices, began to undermine the foundations of protectionism. Mature industries, seeking outlets for their surplus production, supported the opening of borders to access new customers. At the same time, technological advances were revolutionizing transport and communication, making cross-border trade easier and less costly. This context naturally favored a discourse in favor of free trade, supported by the rise of liberal economic ideologies that extolled the virtues of unfettered trade for global economic growth. Moreover, the era was marked by the signing of numerous bilateral and multilateral trade agreements, in which nations agreed to mutually reduce their customs barriers. These treaties paved the way for a considerable increase in international trade. The expansion of industrial production beyond the capacity of domestic consumption also played a crucial role, driving companies to seek out external markets to dispose of their surpluses. This search for new markets was made all the easier by periods of relative peace between the major powers, providing the stability necessary for the growth of international trade. Thus, the decline in protectionism did not occur in a vacuum; it was the product of a convergence of economic, technological, ideological and political transformations. These changes not only eased trade constraints, but also paved the way for an era of economic globalization that would redefine international relations.
The rise of the first globalization was strongly stimulated by the unprecedented development of means of transport. In the 19th century, the advent of steam power and the continuous improvement of transport infrastructures revolutionized international trade. The revolution in maritime transport saw the construction of faster, more reliable steamships, which replaced sailing ships dependent on the vagaries of the wind. This led to a significant and steady increase in trade flows, as goods could now be moved faster and over longer distances. What's more, the opening of waterways such as the Suez Canal in 1869 considerably reduced maritime distances between Europe and Asia, speeding up trade and reducing transport costs. On land, the construction of rail networks revolutionized the transport of goods and people. Trains offered superior loading capacity and far greater speed than traditional modes of land transport such as carts or river navigation. This transformation was particularly notable in the United States, where the transcontinental Railroad, completed in 1869, linked the East and West coasts, opening up vast regions to trade and investment. This intensification of trade led to a significant drop in transport costs. The economies of scale achieved by larger ships and more efficient rail transport reduced the cost of delivering goods. As a result, products could be sold at more competitive prices in distant markets, making international goods more accessible and increasing demand. In addition, lower transport costs also made raw materials cheaper for producers and enabled the integration of remote regions into the global economy, facilitating the export of previously inaccessible resources. The impact on local economies has been profound, with the opening up of new markets and regional specialization based on comparative advantage. The development of transport thus played a key role in the dynamics of early globalization, making international trade not only possible but also profitable. This process helped weave an increasingly interdependent global economic network, defining the trajectory of international trade for decades to come.
The rise of the first globalization was strongly stimulated by the unprecedented development of means of transport. In the 19th century, the advent of steam power and the continuous improvement of transport infrastructures revolutionized international trade. The revolution in maritime transport saw the construction of faster, more reliable steamships, which replaced sailing ships dependent on the vagaries of the wind. This led to a significant and steady increase in trade flows, as goods could now be moved faster and over longer distances. What's more, the opening of waterways such as the Suez Canal in 1869 considerably reduced maritime distances between Europe and Asia, speeding up trade and reducing transport costs. On land, the construction of rail networks revolutionized the transport of goods and people. Trains offered superior loading capacity and far greater speed than traditional modes of land transport such as carts or river navigation. This transformation was particularly notable in the United States, where the transcontinental Railroad, completed in 1869, linked the East and West coasts, opening up vast regions to trade and investment. This intensification of trade led to a significant drop in transport costs. The economies of scale achieved by larger ships and more efficient rail transport reduced the cost of delivering goods. As a result, products could be sold at more competitive prices in distant markets, making international goods more accessible and increasing demand. In addition, lower transport costs also made raw materials cheaper for producers and enabled the integration of remote regions into the global economy, facilitating the export of previously inaccessible resources. The impact on local economies has been profound, with the opening up of new markets and regional specialization based on comparative advantage. The development of transport thus played a key role in the dynamics of early globalization, making international trade not only possible but also profitable. This process helped weave an increasingly interdependent global economic network, defining the trajectory of international trade for decades to come.
The first globalization was also marked by the globalization of migratory flows, a far-reaching human dynamic that accompanied and reinforced the economic and social transformations of the time. International migration took on a massive dimension, with millions of people leaving their countries of origin to settle in new parts of the world, often driven by the search for a better life, escape from harsh conditions, or the lure of economic opportunity brought about by the industrial revolution and the expansion of colonial empires. These human flows were facilitated by the same technological advances that enabled the intensification of trade in goods and services. Lower shipping costs made transoceanic travel accessible to a greater number of people. Vast population movements took place, notably from Europe to North America, Latin America, Australia and New Zealand. These migrations were often encouraged by colonial and national governments seeking to populate territories, develop agriculture and meet the labor needs of growing economies. Immigrants not only contributed to the economic development of their host countries through their work, but also played an important role in the transfer of skills, knowledge and cultures. The diasporas created by these population movements have served as bridges between nations, facilitating other forms of exchange such as trade, investment and even diplomatic relations. At the same time, these massive migrations had profound consequences on societies, both for the host countries and for the countries of origin. Countries of origin may have suffered from the loss of population, but often benefited from remittances. Host countries, meanwhile, saw their demography, culture and economy transformed by the arrival of these newcomers. The globalization of migratory flows during the first globalization was therefore a major phenomenon that helped shape the modern world, its economies and societies. It was an essential factor in global economic integration, bringing peoples closer together and forging transnational links that continue to influence global dynamics today.
The first wave of globalization was characterized not only by expanding trade and population movements, but also by significant financial globalization. International financial flows, in the form of foreign direct investment, loans, bonds and shares, began to intensify during the 19th and early 20th centuries. The increase in cross-border financial flows was closely linked to economic growth and industrialization. Developing countries and those undergoing rapid industrialization had a considerable need for capital to finance their expansion. At the same time, European countries, particularly the UK, had surplus capital which they sought to invest abroad in search of higher returns. This led to a major influx of capital, notably into infrastructure such as railroads, ports and mines, but also into utilities and the financial sector itself. Innovations in the financial sector, such as the creation of organized stock markets and the expansion of the international banking system, facilitated these capital movements. European banks established branches abroad and began to play a major role in financing international trade and investment. The relative stability provided by the gold standard, a monetary system where currencies were convertible into gold at a fixed rate, also encouraged cross-border investment by reducing exchange risk. This convertibility reinforced confidence in international financial transactions and facilitated trade and investment on a global scale. However, this financial integration was not without risks. It made national economies more interdependent and therefore more vulnerable to financial crises. The financial panic of 1873 and the banking crisis of 1907 are examples where financial shocks spread rapidly from one country to another, demonstrating the drawbacks of an interconnected financial system. Financial globalization was thus an essential pillar of the first globalization, contributing not only to the increase in global wealth but also to the emergence of a more complex and interdependent world economy. It laid the foundations for today's global financial system, while highlighting the challenges associated with managing international capital flows.
European Hegemony: Power, Prosperity and Radiation[modifier | modifier le wikicode]
During the period of early globalization, Europe occupied a central and dominant position in the concert of nations. This era is often seen as the apogee of European influence, when the continent's imperialist powers - the UK, France, Germany and others - extended their economic, political and cultural sway across the globe. The export of European capital, ideas, technologies and modes of governance shaped economies and societies across continents. However, this period of European domination was also marked by a lack of unity within the continent itself. European nation-states, then in the throes of asserting their sovereignty, were imbued with rivalries and expansionist desires that would inevitably lead to direct confrontation. This competition translated into an arms race, shifting alliances and a series of diplomatic crises that ultimately led to the conflagration of the First World War in 1914. The war was a dramatic tipping point, marking the end of a period of unchallenged European hegemony and paving the way for new balances of power. At the same time, the United States, benefiting from its vast territory, abundant natural resources and constant influx of immigrants, began to assert itself as a rising power. The American economy gained in strength, and the country began to extend its influence beyond its borders, positioning itself as both a rival and a partner for the European powers. The inter-war years saw the United States assert itself as a key player on the international stage, a trend that would become even more solidified with the two world conflicts of the 20th century. Thus, the first globalization was not only a period of integration and economic expansion, but also one of paradoxes and contradictions, where international cooperation coexisted with intense rivalries, foreshadowing the major geopolitical upheavals that would reshape the world in the following century.
Mechanisms of the Transportation Revolution and their Implications[modifier | modifier le wikicode]
The transportation revolution is a phenomenon that has truly transformed economic and social dynamics on a global scale, and its beginnings can be traced back to the 18th century. The initiative to link Europe's river basins with large navigable canals was one of the first milestones of this revolution. Essential for trade and industrialization, this undertaking considerably facilitated trade by reducing transport costs and times within the continent.
Canals made it possible to transport bulky or heavy goods, such as coal, ore and other raw materials essential to industrialization, over long distances at far lower costs than traditional overland means of transport. They thus played a crucial role in the economic development of hitherto isolated regions, and contributed to the expansion of domestic markets. However, it was in the 19th century that the transportation revolution really took off, with the arrival of the railways. The invention of the steam locomotive and the construction of railroads were decisive technological advances that changed the game. Trains were faster, could carry much heavier loads and were not limited by natural or man-made waterways. Rail networks expanded rapidly, linking major cities, industrial centers and even cross-border regions. Parallel to these land-based developments, advances in shipbuilding enabled the construction of larger, safer and faster ships, capable of crossing oceans with larger cargoes. The steam engine replaced the sail, eliminating dependence on winds and currents and enabling more regular and predictable sailing schedules. These innovations had a catalytic effect on international trade, bringing continents closer together and making economic globalization all the more concrete. By the turn of the 20th century, these technological advances in transportation had shrunk the world, opening up distant markets and facilitating the global economic integration that would characterize the first wave of globalization. The effects of the transportation revolution on society were equally profound, fostering not only urbanization and changes in population distribution, but also enabling a more rapid spread of ideas and innovations across the globe.
The rise of the railroads in the 19th century marked a decisive turning point in the modernization of transport infrastructures, and played a key role in the Industrial Revolution and the first globalization. Starting in Great Britain and Belgium in the 1850s, this boom rapidly spread to France in the 1860s, and then to the whole of the European continent and beyond in the following decades. Railroads brought a series of unprecedented benefits. Their speed significantly reduced travel times, linking distant towns and regions and fostering the emergence of more integrated national markets. The reliability of rail services, with a remarkably low number of accidents compared with other modes of transport at the time, reinforced public and business confidence in this means of transport. In addition, the power of steam locomotives made it possible to transport large volumes of goods, such as coal, and passengers, consolidating economies of scale and stimulating trade and industrialization. By 1914, railroads were at the heart of Europe's transport system, and the appearance of streetcars in major cities was testimony to the continuing innovation in urban transport. These electric streetcars, better suited to navigating the narrow, congested streets of metropolises, improved urban mobility and played a key role in the expansion and increasing urbanization of European cities. At the dawn of the First World War, the European rail network had reached a level of development that would only be surpassed by subsequent innovations in motorized transport. But in those days, rail was the symbol of connectivity and efficiency, contributing not only to economic growth, but also to a new perception of space and time. It had revolutionized travel, trade and even warfare, becoming an indispensable part of everyday life and a key driver of globalization.
The expansion of transportation networks, particularly railroads, considerably altered the perception and use of space in the 19th century. The concept of the isochrone, defining the geographical area accessible within one hour of transport, emerged as a key tool for understanding the impact of mobility innovations. For a retailer, the one-hour isochrone draws the catchment area, i.e. the extent of the potentially accessible market. This means that a larger population can now be reached more quickly, expanding commercial and economic opportunities. From the worker's point of view, isochrones widened the scope of employment opportunities. If one's salary was considered insufficient, it was now conceivable to look for a higher-paying job in a company located an hour away, thus increasing competition between employers to attract labor. This is particularly relevant in an urban area of 400,000 inhabitants, where employment options are multiplying. The transport revolution has also brought about profound changes in social structure and human relations. People began to take the train to work, a great first that began as early as the 1850s to 1870s. This increased mobility led to the development of suburbs, as workers were able to live a considerable distance from their place of work while keeping their commute time to a minimum. This phenomenon allowed a certain separation between home and work, enabling families to choose living environments far from the hustle and bustle and pollution of industrial areas, while still benefiting from the economic advantages they offered. The impact of this transport revolution was not limited to the economy and work; it also transformed social life. Leisure travel became more common, family visits more frequent, and social and cultural events more accessible, contributing to an enrichment and diversification of life experiences for many Europeans. In short, the transportation revolution was an essential driving force in opening up space and expanding the horizon of possibilities, redefining human relationships on an individual and collective scale.
Steamships revolutionized maritime transport in the 19th century, overturning both the speed and efficiency with which people and goods could cross the oceans. One of the most significant transformations was the halving of the time needed to cross the Atlantic, from around 30 days to just 15. This made transatlantic travel much more convenient, and stimulated flourishing international trade and the movement of people. The first steamships used paddlewheels, a technology which, while revolutionary compared with sailing, had its limitations. Paddlewheels were less efficient in rough waters and could be damaged by high waves. In addition, they took up a lot of space on the sides of the ship, limiting loading capacity. The introduction of the propeller (or Archimedean screw) was a major breakthrough. Being fully submerged, propellers were more protected from the elements and offered less resistance to forward movement in the water, making ships faster and more economical in terms of fuel consumption. They also enabled better control and maneuverability of the vessel, which was crucial in crowded ports and on busy shipping lanes. These technological improvements, combined with the construction of larger, stronger metal ships, ushered in an era of mass shipping. Steamships played a key role in the expansion of the British Empire, and were essential for maintaining lines of communication and trade between the UK and its colonies around the world. In addition, they facilitated mass immigration to the Americas, particularly the USA, where many Europeans sought new economic opportunities and a better life, contributing to the wave of globalization and population movements of the time.
The transition from sailing to steam navigation marked a milestone in the history of globalization, making maritime transport safer and faster. The advent of steamships brought unprecedented predictability to sea travel. Whereas sailing ships were at the mercy of the vagaries of the climate, subject to major delays due to adverse weather conditions, steamships were able to maintain much more regular schedules. This increased regularity and speed had far-reaching repercussions, not least on immigration. People wishing to emigrate knew they could count on more precise arrival dates, making it easier to organize their departures and arrivals in new countries. This contributed to massive waves of immigration, particularly to the New World, where the promise of freedom, opportunity and prosperity attracted many Europeans. On the commercial front, steam navigation made it possible to establish fast, reliable sea links, essential to the development of international trade. Goods could be delivered with greater certainty of arrival date, reducing risk for traders and enabling more efficient inventory management. Agricultural products, such as rice, which had previously been considered exotic or expensive in Europe due to slow and uncertain transport routes, became more accessible and less expensive. Thus, the diversification of food in Europe was one of the many tangible benefits of this innovation. The increased reliability of travel also had implications for the world of business and finance, enabling faster transactions and the exchange of information. Shipping companies were able to establish fixed schedules, and marine insurance, once extremely expensive due to the high risks associated with sailing, became more affordable. The steamboat revolution was a key factor in globalization, facilitating trade, cultural exchange and population movements on a scale never before possible, bringing different parts of the world closer together in a way that would profoundly shape contemporary and future societies. The impact will also be felt on transport costs, which will plummet.
The year 1859 marked another crucial milestone in the acceleration of globalization, with the laying of transatlantic telegraph cables, a feat that linked the European and American continents in an unprecedented way through near-instantaneous communication. Telegraph cables enabled the rapid transmission of information over long distances, revolutionizing international communications and having a particularly strong impact on financial markets. Before this innovation, news crossed the ocean at the speed of ships, taking weeks to reach its destination. Financial information was therefore often out of date by the time it was received, making stock market speculation and investment decisions extremely risky. Instant communication changed all that, enabling stock markets to react in real time to economic, political and commercial developments. The implications of this breakthrough were far-reaching. For the first time, financial transactions and investment decisions could be made synchronously on different continents. The result was much greater economic interdependence and market volatility. With information now circulating in a matter of minutes, a chain reaction could occur on the world's markets. A stock market panic in New York could instantly create uncertainty among investors in London and Paris, leading to massive share sales and market declines. However, this connectivity also had a positive side. It enabled greater transparency and better corporate governance by facilitating the dissemination of timely and reliable financial information. Investors could now access up-to-date data, enabling a more informed and dynamic business environment. In addition, the telegraph had a significant cultural and social impact, as news from around the world could be shared almost instantaneously. Political events, scientific discoveries and even trivia could be communicated rapidly to an international audience, contributing to an awareness of an interconnected global community. This technological innovation was therefore one of the factors that paved the way for the twentieth century, characterized by an integrated global economy and a fast-moving information culture that have become the norm in contemporary society.
Assessment of the Pioneering Era of Globalization[modifier | modifier le wikicode]
The first period of globalization, from the mid-19th century to the outbreak of the First World War, was a pivotal time in the formation of the modern world. It was shaped by remarkable technological advances and an upheaval in economic and social structures. The gradual erosion of physical and economic frontiers, coupled with the uneven integration of markets, led to an era of unprecedented growth and tension. Europe, at the heart of this dynamic, played a leading role, despite the internal divisions that ultimately led to its partial self-destruction during the war.
Reduced protectionism, improved transport and instant communication revolutionized exchanges and interactions on an international scale, fostering growing interdependence between nations. Mass migration, capital flows and the exchange of goods and ideas not only strengthened national economies, but also intertwined the destinies of people the world over, foreshadowing the complexities of today's global economy.
As the rise of the United States began to reshape the global balance of power, Europe was plunged into the turmoil of war, underscoring the fragility of an interconnected system. This historical period raises ever-relevant questions about how nations can work together for shared prosperity while managing the inequalities and tensions that inevitably arise from international competition and cooperation.
Ultimately, the lessons of the first globalization remain crucial to understanding the challenges and opportunities of our globalized age. They teach us the importance of innovation and adaptability, while warning us of the risks of conflict and disunity that can emerge from an increasingly interdependent world.