Module 8: Globalized World

Globalization is a contested and tortured concept. It has been used by many different actors in many different ways. It has been used to describe economic interconnectedness. It has been used to describe the institutionalization of politics through bodies such as the UN. It has been used to describe the spread of cultural products across the planet. Most colloquially, globalization is used to describe a world that has become smaller and more accessible to more people. However, it is important to understand the processes and functioning of globalization in the study of global politics. It has had a profound influence on the economic, political, and even social organization of global politics. In this module, we are going to explore the definition of globalization. Using the model developed by Straus and Driscoll, we will look at the first global age (1815-1914) and the second global age (1989+). We will look at how each age is shaped by changes in global power, global interactions, and global tensions. Finally, we will assess the concept of globalization through our theories and approaches to global politics. In the end, this module asks you to consider some critical questions in the study of global politics. How has the world changed economically, politically, and even socially over the last 100 years? Are there lessons that can be learned from the end of the first global age or is history doomed to be repeated?

The concept of globalization is one of those terms that has become increasingly difficult to pin down. This is due to many reasons, including the term moving from academia to public discourse and how so many different groups have used the term in so many different ways. The ultra-wealthy and mobile elite use globalization to describe how national boundaries are made more porous. This opens the world to increased access, whether that be for business or pleasure. Similarly, international finance uses globalization to describe a nearly unchecked network of stock exchanges and investment products that operate 24 hours a day, 7 days a week. Trade and supply chains are a vital aspect of globalization, where products are designed, manufactured, and sold through global supply chains that source and assemble goods around the world. These global supply chains also create interdependencies that create a butterfly effect, whereby events in far-off places can have a profound impact at home. The international institutions of global politics and economics, like the UN and the World Bank, have globalized aspects of governance. Globalization applies to cultural products where American music and movies, Bollywood, and K-Pop trend far outside their country of origin. Ideas and norms have become globalized through the increased density of global communication technology and the growing number of diaspora communities. And all of this is reinforced by the way we experience the world. If we were to look at the things around us, the technology we use, the cultural goods we consume, the things we own, the food we eat, and the places we travel, it is apparent we are part of a globalized world.

Figure 8-2: Source: https://www.flickr.com/photos/nottinghamtrentuni/25688624132/
Permission: CC BY-NC-ND 2.0  Courtesy of Nottingham Trent University.

However, to fruitfully assess the impact of globalization on global politics, we need a working definition. We will use the definition proposed by Straus and Driscoll (2019): “the multidimensional and transnational ways in which people, things, information, and ideas interact and are interconnected across space and time.” In more colloquial terms, globalization is the shrinking of the world in terms of geographic space and the experience of time, resulting in more and deeper forms of integration. When studying global politics, it is important to recognize that shrinking space and time brings people and issues together, creating tensions. Also, borrowing from Straus and Driscoll (2019), global politics is therefore shaped by the need to deal with the resulting interactions and tensions. A useful way to parse the above argument for our purposes is to look at what drives interactions and tensions in global politics. There are three primary clusters where interactions occur and possible tensions arise: global markets, information and communication technology (ICT), and global power.

Global Markets

‘Global markets’, or economic globalization, refers to the extension of supply and demand forces beyond state borders. The most traditional form of economic globalization is international trade and, to a lesser degree, services. International trade occurs when goods cross borders. This could be bilateral trade between two countries, multilateral trade within regions, or global trade. According to the WTO, international trade in goods grew to 19.67 trillion US$ in 2018 from 61.81 billion US$ in 1953. International trade in services grew to 5.63 trillion US$ in 2018 from less than 1 trillion US$ in 1990. This growth in trade and services has a significant impact on global politics. It creates a high degree of economic interdependence whereby actions or events in one part of the world have substantial repercussions in other parts of the world. For example, when the Organization of Petroleum Exporting Countries (OPEC) applied an oil embargo in 1973, the price of oil in the United States quadrupled, creating an economic crisis.

The growth in international trade and services also significantly impacts global politics due to distributional effects. The distributional effect measures how something benefits some to the detriment of others. This can be within the state, for example, when manufacturing jobs are sent off-shore, chasing cheaper labour costs or lower regulatory burdens. Or it can be between states, when one state benefits to the detriment of another, for example, when Ireland cut corporate taxes to lure MNCs like Dell. Further, the implications of global markets can be felt in political discourse. For example, there are tensions between Canada’s economic sectors, like resource extraction and manufacturing, which also have regional implications. There are tensions in debates over corporate taxation, unemployment, and social welfare provisions. And there are even darker implications in debates over refugees and immigrants that can spill over into populist, jingoistic, and nationalist movements.

The growth in international trade and services is eclipsed by financial globalization. Financial globalization includes Foreign Direct Investment (FDI), the stock and bond markets, and the currency market. FDI is the establishment of economic activity in another state to increase market share or reduce costs. FDI accounted for nearly 2 trillion US$ in 2016. The international stock market equals tens of trillions of dollars. The bond market is where governments raise funds by selling debt. In 2019, the global bond market equalled 100 trillion US$. However, the largest movement of international finance is in the currency market, where national currencies are bought and sold by states and companies to trade internationally or by speculators betting on whether a currency will appreciate or depreciate.  The daily turnover in the currency market was nearly 6.6 trillion US$ in 2019. The rise of financial globalization brings states, markets, economies, companies, labour, and social movements together, creating significant tensions. For example, when large investors or even other states bet against a state’s currency, it devalues, making buying foreign goods and necessary inputs for domestic manufacturing much higher. It also creates a debt trap if the state needs to service debt denominated in foreign currencies. More specifically, we see this tension play out in the 1992 run on the British Pound, 1994 Latin American Debt Crisis, and the 1997 Asian Debt Crisis. In all cases, large investors lost faith or saw an opportunity for profit in selling off large currency holdings. A different tension arises when large amounts of money flow quickly into a particular sector or state. This creates both a bubble in that sector or state, which will inevitably pop, benefitting a few large privileged traders and harming the greater number of consumer traders. It can also create surplus cash holdings, which are then circulated into low-interest loans. This, in turn, can lead to irresponsible lending/borrowing and eventually crashes, as we saw in the 2008 housing crisis.

The final aspect of global markets is the internationalization of supply chains. MNCs are companies that diversify resource collection, manufacturing, design, and sales of their goods across at least two states. There are tens of thousands of such companies in the world. Some are relatively small companies, working in just two states. Others have budgets that rival many states, like Apple, Walmart, and Amazon. Importantly, 92 of the largest 100 MNCs are headquartered in the US, EU, and Japan. In recent years, many MNCs have bought out their competitors and created massive subsidiary networks. This means that some of the companies we associate with particular states are no longer headquartered there: Budweiser is now part of a Belgium MNC, InBev, and a Japanese MNC, Ito-Yokado, owns 7-11. Other conglomerates, like Proctor and Gamble, own over 80 brands that operate in over 180 countries. These include many household name brands like Gillette, Oral-B, and Tide. Importantly, intra-firm trade accounts for a significant amount of economic globalization, where goods are traded between firms or components are widely sourced and imported for manufacturing, distribution, and sales. These global supply chains create tensions in global politics. FDI flows are associated with off-shoring, where companies can access cheaper labour or less regulatory obligations, as mentioned above in relation to the impact of the distribution effect. FDI and global supply chains are also associated with neoliberal policies that have led to market liberalization and MNC penetration of majority world markets. More recently, states like China have been challenging the status quo of international trade by investing heavily in the majority world, creating alternative dependencies. This brings states like China into potential conflict with western Great Powers like the US and the EU.

Information and Communication Technology

Historically, advances in information and communication technology (ICT) and transportation technology have driven the processes of globalization. Inventions like steamships and later freighters and airplanes have created the backbone of international transportation and trade. Inventions like the telegraph, the telephone, satellites, and the internet have fostered the near-instantaneous movement of information and ideas. Traditionally, ICT and transportation technology have privileged the elite in the minority world. It has pushed minority world economies into the ‘information age’ and a ‘network society’. This has led to deindustrialization and major shifts in economic organization. However, more recently, these advances have become more widely available to the majority world, facilitating diasporas communities and the flow of remittances. It has lowered barriers to spreading cultural products to compete with behemoths like Hollywood and the American music industry. In the majority world, advances in ICT have democratized access to information and allowed some states and actors to leapfrog ahead in their economic organization. Internet access is a basic metric of how ICT is transforming the world. According to the World Bank, over 87% of the population has access to the internet in high-income countries, while in low to middle-income countries, that dips to 54%. However, it is in the low to middle-income countries where growth has been the fastest. In 2000, 93% of East Asia and 99% of South Asia/Sub-Saharan Africa were offline. By 2016, 57% of East Asia, 26% of South Asia, and 20% of Sub-Saharan Africa had internet access, and the trend is only growing exponentially. The decreasing cost and increased access to ICT have both positive and negative consequences. On the positive side, these advances in ICT allow for the democratization of information in politics, economics, and culture. Politically, ICT allows people access to information, the ability to organize domestically and internationally, and challenge the status quo. Economically, it allows companies to expand their market reach. Culturally, it allows the majority world to partially push back against cultural imperialism and access markets in the minority world. However, on the negative side, it also allows the state to increase surveillance on its citizens. While this is notable in democratic states like Canada and the US, it is even more draconian in authoritarian states like China. It also facilitates international criminal networks that can access new markets for illicit goods. It empowers transnational terrorist groups in terms of technological knowledge and recruitment. Beyond these direct negative externalities, the spread of ICT has fostered a flood of misinformation that has created deep cleavages in society. It has led to a loss of personal privacy, often sacrificed unwittingly, to corporations that can then be packaged and sold to other actors. At the moment, there is a deep tension in the potential impact of changes to ICT in our globalized world. For some, it is a transformative event that will empower the best of people and facilitate solutions to the global problems we face. For others, it is another tool to be subverted by the privileged and wealthy to maintain or even increase global inequality.

Figure 8-4: Source: https://www.flickr.com/photos/cambodia4kidsorg/5874042262/ Permission: CC BY 2.0  Courtesy of Cambodia4kids.org Beth Kanter.

Global Power

The 21^st century is shaping up to be a highly contested space in terms of global power. Thirty years ago, at the end of the Cold War, the US looked to be the sole superpower. Notable authors like Francis Fukuyama argued we were witnessing the end of history. In the last thirty years, China has risen as the dominant force in South East Asia and asserted itself globally. Emerging from the collapse of the USSR, Russia has reasserted itself in the former Soviet Republics, Eastern Europe, and regional hotspots like the Middle East. From India to Brazil, a range of regional powers have started to flex their power and influence. Most interestingly, there has been a concerted effort to diversify from the post-war international order, with states forming groups like the BRICS (Brazil, Russia, India, China, South Africa) and the Shanghai Cooperation Organization (SCO). These groups challenge the status quo organizations like the World Bank and the IMF that have largely excluded emerging powers from their governance structures. In their place, they have created alternate institutions like the New Development Bank. Simultaneously, the US, which was instrumental in establishing the post-war order, has shown signs of retreating from international commitments.

This is a moment of potentially profound change in global politics, but it is not unprecedented. There have been many such historical moments of change. The fall of the Berlin Wall in 1989, the American abandonment of the gold standard in 1973, the end of World War Two in 1945 are all such watershed moments. However, what is most unsettling about the current period is the uncertainty of what is to come. Are we witnessing the fall of Pax Americana? If so, what is to follow? Are we witnessing the emergence of a multipolar world that more resembles the 19^th-century Concert of Europe? Or will American leadership be replaced by Chinese leadership? And if so, how would that influence the shape of global politics and global institutions? Or are we witnessing the reinvention of American influence, perhaps with the European Union?  Importantly, all of this uncertainty is unfolding in the context of global issues that require global solutions: a global pandemic, global climate change, international criminal networks, transnational terrorism, unprecedented levels of global migration, and new technologies that could transform the human experience or be weaponized. What is certain is that shifting power structures are both an opportunity to improve the human condition and a threat to peace and prosperity.

The shifting powers in global politics also impact the structures put in place to govern global politics. Before unpacking this argument, it is important to define what we mean by governance. Governance is not government. In domestic politics, we have governments: executive bodies with authority to create, enact, and enforce the law within their borders. There is no equivalent to the government in global politics since it is an anarchic system that recognizes no higher authority than the state. Governance, on the other hand, simply refers to the management of particular processes or issues. Questions of governance ask what the issue or process is? Who is involved? What are the norms or rules that set expectations of behaviour? What are the enforcement mechanisms to compel compliance? In the post-World War Two international order, there are three principal actors in global governance: the state, international institutions, and non-governmental organizations (NGOs). These three categories of actors seek to influence the norms, rules, and laws that govern global politics on a wide range of issues and processes. These can be close to universal issues like human rights. They can be global issues like climate change. They can be functional issues like internet governance or the global postal system. Some issues are highly formalized, such as the economic rules agreed to in the World Trade Organization. Others are more aspirational, such as the Universal Declaration of Human Rights. Some institutions wield real power, such as the International Financial Institutions – the World Bank, the IMF, and the World Trade Organization. Others can only exert influence when asked by state parties, like the International Court of Justice. In order for governance to work, there needs to be some consensus amongst the actors, or at least the most powerful actors, on the goals, the means to achieve these goals, and how to facilitate compliance. When such consensus exists, agreements are possible, like the UN Charter in 1945. When this consensus wanes, governance weakens or breaks, as we have seen in the UN Security Council’s inability to enforce international order.

These are important questions because, as previously mentioned, we face a growing number of global issues that require global solutions. If there is a lack of consensus amongst the most powerful states, it will be difficult to agree on the norms, rules, and laws necessary to govern many of these issues. If the US is unwilling to maintain the international economic and political orders created in 1945, who or what will fill that void? If the US does try to reassert itself in the international order, but emerging powers like China or revanchist powers like Russia refuse to be led, what governance is possible? In terms of global politics, this is perhaps the biggest tension we face. As the existing international order begins to fray, what forms of governance will fill that gap?

The use of ‘globalization’ as a concept may have grown exponentially in the 1990s, but the processes of globalization are not new. The Silk Road, created by the Han Dynasty in ancient China, existed between the 2^nd century BC and the 18^th century. It connected trade routes from the Korean peninsula through to the Mediterranean Sea. The Mongol Empire of the 13^th and 14^th centuries was the largest contiguous land empire ever created, stretching from the Sea of Japan to the east, Finland in the North, to the border of the Indian subcontinent in the South, and Hungary in the West. Both the Silk Road and the Mongol Empire connected a vast swathe of the world through military, economic, and political orders. Other empires could be included here, such as the Macedonian Empire, the Roman Empire, the Umayyad Caliphate, and the Ottoman Empire.

However, there is a utility in differentiating between these historical and nascent forms of globalization and the modern version. Contemporary globalization is defined by a global scale of interconnectedness and technology advancements that compresses space and time. There are very few places in the world today that you cannot visit if you have the economic means and the will to do so. For example, roughly 1,200 people get permits to climb Mount Everest every year, with people having to line up to reach the summit. The rest of the world is readily available for the average tourist to visit from the sites of Europe to the Taj Mahal, from the Mongolian steppes to Machu Pichu. With a satellite phone, there is almost no place on earth where you are out of touch with friends and family, from war zones to Antarctica. These are superficial examples of much deeper processes of economic, political, and cultural interconnectedness. As discussed above, we live in a world where economic activity works through global supply chains, where politics operates through international institutions and transnational networks, and where culture spreads on a global scale. This begs the question, where and when did contemporary globalization begin?

The First Global Age

Modern globalization can be divided into two phases, the first and second global ages. The first global age emerged out of the Pax Britannica, or British Peace (1815-1914). Following the Napoleonic Wars (1803-1815), Great Britain emerged as the dominant power through its naval power, industrial capacity, and an empire upon which the sun never set. However, it is critical to note that Britain, like other colonial powers, built this empire through the violence and subjugation inherent in colonialism. This empire included dominions like Canada, protectorates like Egypt, mandates like Palestine, and overseas territories, three of which still exist today, the Falkland Islands, Gibraltar, and British military bases on Cyprus. In pursuit of economic integration in its far-flung empire and to play to its advanced industrial economy strengths, Great Britain abandoned mercantilism in favour of free trade. Mercantilism is an economic policy that seeks to maximize exports while minimizing imports through tariffs and subsidies. Mercantilism was popular with colonial powers as they used the resources and labour of their colonial holidngs and then required these colonies to purchase the manufactured goods produced. Free trade policies lower or even remove tariffs to find comparative advantage: where two or more parties produce those goods and services where they have a lower opportunity cost and trade with other parties where they have lower opportunity costs. This would result in all parties having access to more goods at a lower price than if they produced all goods and services domestically. Great Britain supported the free trade regime by policing trade routes with its navy and implementing the gold standard in 1821. Both of these policies provided stability to an increasingly globalized free trade system. As this free trade system expanded, it attracted other industrialized countries, in Europe, the United States, and Japan. The logic of comparative advantage inherent in a free trade system led to rapid economic growth, further industrialization, technological advancement, military strength, and greater investment in research and development. However, there was also a darker side to this narrative of globalization. While British power fostered nearly 100 years of peace between European powers, this was not the colonial experience in Africa, Asia, the Americas. While the industrialized states realized a virtuous cycle of free trade, technological advancement, and prosperity, their colonial holdings experienced the opposite: deindustrialization, raw commodity exports, and dependency on their colonial masters. Between 1815 and 1914, Europe and North America had expanded their economies eightfold while Asia and Latin America declined to a third of their industrial activity. This established an international economic model that is still in operation today. Resources are imported from peripheral states to the metropole hub for manufacturing and then exported back to the periphery. This system has created a strong dependency trap that many states have been unable to escape. However, by the early 20th century, the world had been globalized to an astonishing degree despite this dark side.

To bring this back to the analytical model suggested by Straus and Driscoll, we can identify how changes in global forces led to particular forms of interaction and the rise of particular tensions. In terms of changes in global forces, the first global age is defined by the industrial revolution, Pax Britannica, and the colonial exploitation of the majority world. This created new forms of global interactions, including a global free trade system supported by Great Britain as a hegemonic power, adopting the gold standard, and moving towards decolonization because of the exploitation inherent in the system. From this, several tensions emerged. The majority world deindustrialized, experienced structural violence through colonialism, and became locked into an economic model that pushed them to the periphery. Europe and North America grew economically through a virtuous cycle of industrialization, free trade, increased prosperity, investment in research and development, and further industrialization. However, this cycle also generated militarization, particularly in Germany, the US, and Japan, and British hegemony dwindled. This last tension, militarization and the end of hegemonic stability, came to a head in 1914 and World War One, ending the first global age.

Globalization in Check

In 1900, a war between the Great Powers was inconceivable to many in Europe. Sir Norman Angell, an English economist and Nobel Peace Prize winner, made this point most succinctly in his 1910 publication The Great Illusion. Angell argued that the economic integration of European states through free trade had made war counterproductive. War was no longer the best means to access markets, facilitate trade, and locate raw materials. Instead, free trade, based on comparative advantage, facilitated by a more efficient division of labour, produced greater prosperity for all. However, four years later, the First World War began. This begs the question, how did we go in the space of four years, from a position where a war between Great Powers was unthinkable to a highly destructive global war involving every Great Power? The first part of the answer is in shifting power structures. The Russian, Ottoman, and Austro-Hungarian empires were in decline. This whet the appetite of rising powers who coveted the colonial holdings of their neighbours. Moreover, as these states grew in power, the British declined in relative terms, weakening the previous century’s hegemonic stability. As more states perceived a growing threat from states like Germany, they too militarized, creating multiple security dilemmas. Those who felt threatened but unable to provide for their security sought guarantees from stronger states through secret alliances. This combination of growing distrust amongst European states, the decline of hegemonic stability, the resulting militarization, and secret alliances created a situation where small events in relatively unimportant parts of the world led to World War One.

World War One marks the beginning of nearly seventy years of tension in global politics and globalization. World War One itself critically damaged European powers materially and ideationally. In material terms, the war created nearly 37.5 million casualties through mechanized and trench warfare, the likes of which had never been seen before. At least the same number of civilians were killed or displaced in the conflict. The war destroyed cities and factories, hindering economic recovery after the war. Many states borrowed heavily to fund the war effort. The victors passed this cost on to the defeated powers, most notably Germany, through reparations imposed in the Treaty of Versailles. A naked calculation of the war’s direct economic cost is estimated to be nearly 186 billion dollars.

However, the cost of the war was arguably even higher in ideational terms. The war discredited the idea of European states as deserving of a privileged position in global politics. The experience of mechanized war and trench warfare demonstrated brutality that belied claims of civilizational exceptionalism. European states mobilized over four million colonial subjects to fight, and they bore witness to this brutality and chauvinism, not to mention suffering from overt racial discrimination. The war also discredited the pre-war optimism for free trade and global cooperation. States, even the victors, instead became more protectionist and isolationist. Cumulatively, World War One marks four shifts in global power dynamics that are significant for the processes of globalization. First, the decline of British hegemony and the failure of any state, like the US, to fill this role led to instability. There was nobody to keep ambitious states in check. Second, the punitive measures in the Treaty of Versailles set the conditions for the next global conflict, despite being the declared ‘the war to end all wars.’ Third, the war undermined faith in free trade and global cooperation, leading to protectionism and isolationism. Fourth, the brutality of the war and the costs associated with colonization spurred increased efforts for decolonization.

In terms of globalization, the period between 1919 and 1989 is marked by numerous tensions. The first tension played out during the Great Depression of 1929. Much like World War One’s unprecedented nature, the Great Depression was more destructive than any previous economic crisis. Partly this was due to the economic integration fostered in the first global age under the auspices of Pax Britannica. This raises the risk of contagion, whereby an economic crisis in one part of the world becomes a systemic risk. It was also driven in part by the collapse of the gold standard. However, the Great Depression was primarily driven by beggar-thy-neighbour policies, where states manipulate exchange rates or implement trade barriers that improve their economy while harming others. The Great Depression resulted in 25% unemployment in industrialized countries and a complete collapse of export-driven colonial economies. In terms of globalization, the Great Depression had two direct implications. First, it represents the distrust that states had towards economic integration and global cooperation more broadly. Second, it marks the realization by many colonies that their best interests lay in independence.

The second major tension emerged in the inter-war years, between 1919-1939, as some states adopted more extreme politics. Due to perceptions of persecution, economic crises, and those who capitalized on the discontent these caused, authoritarian and fascist movements came to power in Italy, Germany, Austria, Japan, Vichy France, Greece, Hungary, Portugal, and Spain. Even Norway was subject to the Fascist Quisling Government during the Nazi invasion. On the other side of the political spectrum, there was a rise of communism in reaction to rising class inequality. The most significant communist state was the USSR, which emerged from the revolution in 1922. Other communist states included Estonia, Latvia, Lithuania, Yugoslavia, Poland, North Korea, Albania, Bulgaria, Romania, Czechoslovakia, East Germany, Hungary, China, Tibet, North Vietnam, Guinea, Cuba, Yemen, Kenya, Sudan, Congo, Burma, Angola, Benin, Cape Verde, Laos, Kampuchea, Madagascar, Mozambique, South Vietnam, Somalia, Seychelles, Afghanistan, Grenada, and Nicaragua. While the fascists were largely discredited in World War Two, the communists would emerge as a serious rival to the US and the West.

The third major tension emerged post-World War Two in the form of the Cold War. The Cold War was a bipolar rivalry between western democratic states, led by the US, and the communist bloc states, led by the USSR. The West championed liberal democracy and a market-based economy. The USSR championed a one-party state with a planned and centrally managed economy. The Cold War was, therefore, an economic, political, and military rivalry. This rivalry never sparked a direct war, although it came close several times. Since both the US and the USSR had enough nuclear weapons to destroy the world several times over, it is fortunate this rivalry remained a Cold War. However, both states sponsored proxy conflicts and supported various authoritarian states to confront each other indirectly. These proxy conflicts played out in Afghanistan, Angola, Cambodia, El Salvador, Laos, Nicaragua, and Vietnam. The Cold War fractured the world into two incommensurable systems that saw each other as an existential threat, undermining those institutions and processes supporting globalization.

The fourth major tension emerged in nationalist and independence movements in colonial states. Several factors drove these movements. They were partly driven by the devastation of fighting for their colonial masters in two world wars. They were partly driven by the devastation of the Great Depression. However, leaders like Kwame Nkrumah of Ghana and Mahatma Gandhi of India provided decolonization with a narrative. They argued the powerful and industrial states achieved their status by exploiting their colonial possessions. Moreover, colonies were intentionally locked into a structurally dependent relationship, stripped of agency, and doomed to remain there unless they could achieve independence. The roots of colonial independence movements extend back to the end of the 19^th century. However, most states achieved independence in the 1950s and 60s, vastly growing the number of sovereign states in the world. Early on, these newly independent states were dynamic, seeking to modernize their countries. Being born in the Cold War, many courted both the US and the USSR to gain advantages in trade, FDI, and technology transfers, often playing one side against the other. Some newly independent states sought to distance themselves from both sides of the Cold War rivalry, forming the Non-Aligned Movement (NAM). NAM was lead by regionally important states like India, Egypt, and Indonesia. However, most post-colonial states have remained in a neo-colonial relationship with their former colonial metropole or the West more generally. This is partly due to the political, economic, and cultural structures left behind after independence. It is partly due to the international institutions that reinforce Western-orientated economic development policies and good governance norms. And it is partly due to the production of knowledge centred in Western universities where the bright young minds of the majority world study. Together, the result has been a process of decolonization that struggles with state-building, national unity, economic development, and dealing with colonial trauma. These four tensions limited the processes of globalization between 1919 and 1989.

Second Global Age

As discussed above, globalization as a process and measurement of interconnectedness faced serious tensions for much of the 20^th century. However, it would be wrong to say that there was a wholesale dismantling of globalization. The League of Nations was a significant effort to foster global governance in a broad range of issue areas, from international peace and conflict resolution to labour rights and human rights. While ultimately failing with the outbreak of World War Two, the LoN did push forward the idea of global governance and the value of multilateral diplomacy. The international community applied the lessons learned in the LoN to the United Nations in 1945. The UN adopted the League’s universality, focus on multilateralism, and the functional approach to dealing with issues from labour organization to world health. However, the UN also significantly differed from the League, especially in providing the five Great Powers in 1945 with a privileged and permanent position on the UN Security Council, known as the P5. The rationale for the P5 was based on a critical assessment of the LoN – the League failed in securing and maintaining international peace because the Great Powers either did not join or left when belonging was no longer in their interests. If the Great Powers are not involved, how can peace be maintained? The UNSC P5 have veto rights to ensure that the UN does not challenge them directly. With this privilege comes the responsibility to maintain international peace and security. However, the Cold War rivalry between the US and the USSR, two of the P5 members, greatly diminished the ability of the UNSC to fulfill its mandate. Each side has regularly used its veto power to quash action perceived to be against their interests and the interests of their allies and proxies. Thus, while globalization was institutionalized, it was checked by Cold War tensions.

The Bretton Woods System (BWS) is another important contribution to the processes of globalization. The system ran between 1944 and 1973, seeking to address the root causes of the Great Depression and apply the lessons of the Gold Standard in stabilizing international trade. The BWS includes the International Financial Institutions (IFIs): the World Bank, the International Monetary Fund, and the General Agreement on Tariffs and Trade. The GATT has now become the World Trade Organization. The BWS sought to tame the use of exchange rate manipulation that partly caused the Great Depression. It created the IFIs to facilitate post-war European reconstruction and later international development, manage international financial stability, and lower international trade barriers. In the 1950s and 60s, the IFIs were largely successful: trade rose exponentially, finance was stable, and economies became more interdependent. However, by the 1970s, global tensions began to unravel the BWS. The US was moving deeply into debt, especially with the Vietnam War, and abused its privileged position as the de facto global currency. The reconstruction of Europe and the rise of Newly Industrialized Countries challenged American economic power. The OPEC states manipulated global oil prices to both punish American foreign policy and to generate massive profits. All of this led President Nixon to abandon US$ convertibility to gold, the backbone of the BWS. The influx of cash to OPEC states created petro-dollars that were recirculated into the economy through loans denominated in US$. Since Europe and the US were facing an economic crisis, international lenders offered low-interest loans to sovereign lenders in economically developing and post-colonial states. These loans had such low-interest rates compared to the inflation rate that it was almost free money. This was highly attractive for many of these borrowers as they were struggling under high energy costs and rising welfare costs while also developing their state’s infrastructure. However, US policies to deal with its economic woes resulted in interest rates rising to nearly 15% and a strengthening of the US$. Further, the global economic crisis led to a crash in global exports, especially in cash crops from economically developing and post-colonial states. Petro-dollar loans were no longer free. Instead, they were crippling for economically developing and post-colonial states. These states began to default on their loans, creating another economic crisis that could potentially challenge the global financial system’s sustainability. This produced two results. First, it created highly indebted states with an unmanageable and growing debt load that, in some cases, owe more today than they did in the 1980s. Second, it created a shift in the IFIs towards neo-liberalism. In the 1980s and 90s the IFIs embraced neoliberal policies of market deregulation, small government, and opening countries to foreign investment and competition. If a country needed financial assistance from the IFIs, they had to implement these neoliberal policies, called Structural Adjustment Programs. The result was a tremendous loss of human capital in the majority world. Poverty increased, health decreased, and MNCs benefited from access to markets and resources. Therefore, while there were efforts to institutionalize economic processes of globalization, there were tensions that checked its full implementation.

In 1990, the second global age began to take shape with the end of the Cold War, the re-emergence of China as an economic power, the rise of global finance, the spread of the internet, and relatively high economic growth in the developing and post-colonial states.

The fall of the USSR and the rise of China have defined the political aspects of the second global age. The USSR was seen as an existential threat. That legitimated the use of all and any means to win the Cold War. It was an economic, political, military, and even cultural war. On the other hand, China was a political and military rival to the US, especially in South East Asia. But under Deng Xiaoping, China also became an increasingly important player in the international economy. China was the ‘workshop’ of the world, and many MNCs and investors dreamed of tapping the Chinese market. This shifted the dynamics of globalization with wariness on political and military tensions but growing cooperation on economic issues.

We discussed the rise of global finance in the first section of this module. Remember, while trade represents 19 trillion US$ annually in 2019, just currency exchanges represented 6.6 trillion US$ daily. The growth of finance was facilitated by the deregulation of international markets, most notably currency markets. It was enabled by the growth of ICT, which created a seamless and global market that provided access to more people. It was supported by global supply chains that plugged every corner of the planet into trade relationships. The implications of the rise of global finance have been the creation of a tremendous pool of investment capital available to any project with a potential for profit. However, this investment capital is also precarious for these same reasons. While money may rush in when investors perceive an opportunity, there can be capital flight if perceptions changed. This has played out in economic crises in Latin America (1970-80s, 1994, 1999, 2007-10), South East Asia (1997), and even the sub-prime housing crisis in the US (2008). The primary consequence of financial globalization has been the opportunity and risks associated with such a large pool of available and unregulated capital.

The most obvious and defining characteristic of the second global age is the ubiquitousness of the internet. In economically developed states, access to the internet has become so crucial that many speak of a ‘right’ to access the internet. Advocates argue that it should be treated as a public utility. During the Covid Pandemic, the importance of accessing the internet has been made exceptionally clear – it is how we study, work, and stay connected. The discussion on the digital divide between those who can and cannot easily access the internet has taken on greater salience. Commerce is increasingly conducted online through companies like Amazon and Alibaba. The internet has become the backbone of our economic, diplomatic, and even personal lives. On a darker note, the internet has also become a means to conduct illicit deals, recruit terrorists, and conduct psychological warfare by sowing dissension and misinformation. In terms of globalization, the internet has been an enabling factor for much of the second global age: the rise of international finance, the growth of global supply chains, the opening of new markets, and the creation of new threats.

Finally, the second global age is defined by shifts in global power, much like the first global age. While the US emerged from the Cold War as the last standing superpower, it has been less able to translate that position into the exercise of power. Instead of a unipolar world, we see the rise of a multipolar world on several different dimensions.  Economically, the US is still an important player, but China is rising fast. The EU is the world’s largest market, but it faces several challenges in terms of membership cohesion and domestic welfare provisions. Other regional powers are exercising more power economically as well as politically and militarily, including Brazil, India, Russia, Nigeria, Iran, Saudi Arabia, and South Africa. All of these states are experiencing relatively high levels of economic growth, and with that has come the ability to build military power and exercise political clout. This raises the question of whether these shifts in global power are going to be as destabilizing as they were during the first global age or whether we have learned enough to facilitate a multipolar world of peace and prosperity.

In applying Straus and Driscoll’s model of globalization, we see the second global age built upon changes in the global economy, the widespread adoption of ICT, the rise of new global powers, and challenges to existing power structures. This has generated new interactions between states, MNCs, and global institutions. It has created a near-instantaneous flow of information and ideas, as well as disinformation and propaganda. The second global age has also created unresolved tensions. It is easiest to posit these tensions as questions. Will the US continue to retreat from global leadership? If so, who or what will replace them? If not, how will the tension play out between the US and challengers to the throne? Will the growth of international and unregulated finance generate economic prosperity, or will it became a source of instability? Will the internet foster greater equality, or will it create new divisions between the ‘haves’ and ‘have nots’? And perhaps most importantly, will the second global age end in conflict, like the first global age, or will a new status quo in global politics be established?

Figure 8-8: Source: https://www.flickr.com/photos/governmentza/48687282952/ Permission: CC BY-ND 2.0 Courtesy of GovernmentZA. 

Once again, it is useful to apply our theories and approaches to global politics to the concept of globalization. Globalization, as a concept, has come to mean different things to different people. Realists see the processes of globalization as simply another context within which states pursue their national interest. Nothing really transformational has changed. The world is still constituted by sovereign states which hold a privileged position. There may be new actors, like MNCs or institutions, but they operate within sovereign territories and at the behest of the most powerful. They are given room to act when it is in the most powerful states’ interests to do so. They would argue that both the first and second global orders reflected the hegemonic stability provided by the British and the Americans, respectively. When the British were unable to provide this stability, the world became a much more dangerous place. It is still a dangerous place, and globalization only makes it more dangerous. If the second global order were to fall like the first, the outcome would be far more disastrous. The state remains the thin line between security and danger. For Realists, the most important aspect of globalization is how it might shift the balance of power within the system. They would view the American accommodation of Chinese economic growth as a grave mistake. They would argue that the institutions of global governance, from the UN to the IFIs, are manifestations of Great Power influence. They are tools to be used by the strong to maintain their influence and power in global politics. Finally, Realists would argue that any focus other than that of power and security is a distraction to the state’s national interest – potentially an existential distraction.

Liberals view globalization as an iterated process. They see history bending towards progress, with globalization representing a shift in global politics economically, politically, and even culturally. Liberals argue globalization is fostering a growing interconnectedness between states, economies, markets, corporations, and people. This reduces the privileged role of the state and increases the influence of non-state actors, including institutions, MNCs, and individuals. Rather than a Realist image of a world constituted by sovereign states, Liberals see globalization creating a cobweb of different actors, connected in different ways, and pursuing different interests. Instead of a sole focus on power, Liberals see the globalized world as creating a window of opportunity for progress. They are not naive to the possibility of conflict, and that change creates space for opportunists to push their self-interested agendas. However, these moments of change also present an opportunity to build a more cooperative, prosperous, and equitable world. This is done by learning from past mistakes and seeking to defend individual rights, build economic interdependence, and create institutional responses to global problems.

Constructivism views globalization as a process of norm contestation. Globalization is not an external force with which institutions, states, MNCs, and individuals must contend. It is not a top-down mechanism. Instead, globalization is itself a social construct. It is a product of social interaction between actors. It is derived by the intersubjective meaning generated through economic, political, and social interaction. For constructivist theorists, the real questions focus on the intersection of identities, interests, and practices. How does the shrinking of the world in terms of space and time change how actors see themselves and others? How does this, in turn, influence the logic of appropriateness? In this globalized world, what are the expectations of ourselves and of others? And most importantly, how does globalization shape practices? Does it constitute new norms of cooperation, or does it promote conflict?

For many Critical approaches, globalization is simply another means by which the powerful have maintained their privileged position in global politics. Marxists would argue it is another step in the development of international capitalism. It is the global imposition of a Western economic and political order that accrues benefits to the capitalist class. For example, Marxists would point to the role of the IFIs in ensuring that problems in the majority world do not negatively impact the flow of capital. When the debt crisis hit Latin America, the IFIs enforced Structural Adjustment Programs to benefit the capitalist system and the detriment of the borrower. In other words, these crises were an opportunity to further the interests of global capitalism. Similarly, critical feminists would point to the undue burden globalization has placed on women by disrupting traditional roles and especially the transition to wage labour that disadvantages women. Environmentalists would argue globalization furthers the exploitation of the earth’s resources by extending the logic of extraction, consumption, and pollution at the core of capitalism. Post-structuralism would argue globalization does not exist by itself. Rather, globalization is a discursive practice that reinforces existing structures of power. The various truth claims about globalization made by different actors merely reflect the interplay of power and narrative to sustain the privilege of the few to the detriment of the many. Post-colonialism, for example, traces the degree of continuity in colonial and neo-colonial practices in globalization. While many nationalist movements achieved independence in the 1950s and 60s, there has been little practical change in how Western states exert economic and political control, often through military means. All that has changed is the means.

Defining and operationalizing the concept of globalization, is a core concern to the study of global politics. While the term is used in a variety of ways in common discourse, we have adopted the definition by Straus and Driscoll, “the multidimensional and transnational ways in which people, things, information, and ideas interact and are interconnected across space and time.” An important implication of this definition is that when things interact, tensions will arise. An important part of studying global politics is unpacking how and why these tensions occur as well as the implications of these tensions. In this module we unpacked the first global age built on the hegemony of Pax Britannica. We explored the period between 1919 and 1989, where global tensions checked the processes of globalization. The second global age emerged from the end of the Cold War. Important tensions include the re-emergence of China as an economic power, the rise of global finance, the spread of the internet, and relatively high economic growth in the developing and post-colonial states. Comparing the first and second global ages raises many interesting questions, but none as important as what the future holds in a post-American-led system. Will it end in conflict as happened with the decline of British hegemony in the first global age? Or will lessons have been learned from the past and a stable multipolar order be established? Our theories and approaches to global politics suggest some answers. Realists discount globalization as anything significant and instead look to the changes in the balance of power as predicting order or disorder. They suggest that any stable form of globalization was based on hegemonic stability. Liberals see globalization as an iterative and evolutionary project. Each step is an opportunity for lessons to be learned and progress to be made. They seek a means to further individual rights, build economic interdependencies, and find institutional responses to global problems. Constructivists look to the ways that globalization impacts identities, interests, and practices. They are particularly interested in whether the socially derived meanings attached globalization will foster cooperation or conflict. Critical and Post-structural approaches unpack the rhetoric of globalization, identifying the narratives and discourses that legitimate structures that maintain the influence and privilege of the powerful. It is important to consider which position or positions you find most convincing as this will determine how you understand globalization and the ways that it shapes global politics.

Globalization is defined and operationalized differently by a number of actors. However, in this module, we have adopted Straus and Driscoll’s definition: “the multidimensional and transnational ways in which people, things, information, and ideas interact and are interconnected across space and time.” Put more simply, globalization is the shrinking of the world in terms of geographic space and the experience of time, resulting in more and deeper forms of integration. When studying global politics, it is important to recognize that shrinking space and time brings people and issues together, creating tensions. Global politics is therefore shaped by the need to deal with the resulting interactions and tensions. A useful way to parse the above argument for our purposes is to look at what drives interactions and tensions in global politics. There are four primary clusters where interactions occur and possible tensions arise: global markets, information and communication technology, and global power.

The first global age emerged out of the Pax Britannica, or British Peace (1815-1914). Following the Napoleonic Wars (1803-1815), Great Britain emerged as the dominant power through its naval power, industrial capacity, and an empire upon which the sun never set. However, it is critical to note that Britain, like other colonial powers, built this empire through the violence and subjugation inherent in colonialism. In pursuit of economic integration in its far-flung empire and to play to its advanced industrial economy strengths, Great Britain adopted and promoted a free trade system. Free trade policies lower or even remove tariffs to find comparative advantage: where two or more parties produce those goods and services where they have a lower opportunity cost and trade with other parties where they have lower opportunity costs. This would result in all parties having access to more goods at a lower price than if they produced all goods and services domestically. Great Britain supported the free trade regime by policing trade routes with its navy and implementing the gold standard in 1821. Both of these policies provided stability to an increasingly globalized free trade system. As this free trade system expanded, it attracted other industrialized countries, in Europe, the United States, and Japan. The logic of comparative advantage inherent in a free trade system led to rapid economic growth, further industrialization, technological advancement, military strength, and greater investment in research and development.

In 1990, the second global age began to take shape with the end of the Cold War, the re-emergence of China as an economic power, the rise of global finance, the spread of the internet, and relatively high economic growth in the developing and post-colonial states. The fall of the USSR and the rise of China have defined the political aspects of the second global age. The USSR was seen as an existential threat. That legitimated the use of all and any means to win the Cold War. It was an economic, political, military, and even cultural war. On the other hand, China was a political and military rival to the US, especially in South East Asia. But under Deng Xiaoping, China also became an increasingly important player in the international economy. China was the ‘workshop’ of the world, and many MNCs and investors dreamed of tapping the Chinese market. This shifted the dynamics of globalization with wariness on political and military tensions but growing cooperation on economic issues. The growth of finance was facilitated by the deregulation of international markets, most notably currency markets. It was enabled by the growth of ICT, which created a seamless and global market that provided access to more people. It was supported by global supply chains that plugged every corner of the planet into trade relationships. The implications of the rise of global finance have been the creation of a tremendous pool of investment capital available to any project with a potential for profit. However, this investment capital is also precarious for these same reasons. While money may rush in when investors perceive an opportunity, there can be capital flight if perceptions changed. The most obvious and defining characteristic of the second global age is the ubiquitousness of the internet. In economically developed states, access to the internet has become so crucial that many speak of a ‘right’ to access the internet. Commerce is increasingly conducted online through companies like Amazon and Alibaba. The internet has become the backbone of our economic, diplomatic, and even personal lives. In terms of globalization, the internet has been an enabling factor for much of the second global age: the rise of international finance, the growth of global supply chains, the opening of new markets, and the creation of new threats. Finally, the second global age is defined by shifts in global power. Instead of a unipolar world, we see the rise of a multipolar world on several different dimensions.  Economically, the US is still an important player, but China is rising fast. The EU is the world’s largest market, but it faces several challenges in terms of membership cohesion and domestic welfare provisions. Other regional powers are exercising more power economically as well as politically and militarily, including Brazil, India, Russia, Nigeria, Iran, Saudi Arabia, and South Africa. All of these states are experiencing relatively high levels of economic growth, and with that has come the ability to build military power and exercise political clout. This raises the question of whether these shifts in global power are going to be as destabilizing as they were during the first global age or whether we have learned enough to facilitate a multipolar world of peace and prosperity.

Hegemonic stability is part of the Realist theory of global politics. It argues that global politics is more stable when the economic and political norms, rules, and laws are created and defended by a hegemonic power. A hegemonic power is a state that has an overwhelming preponderance of power in global politics. In the first global age, Britain was a hegemonic power. The British established the basis of the global free trade system by implementing the gold standard that routinized currency exchange and defended the system with its naval power. The second global age was based on American hegemony. Traditionally, when the hegemon is in decline, global politics becomes unstable. In the first global era, the decline of British hegemony led to World War One. The question now is whether the decline of American hegemony will lead to another global conflict or whether a stable multipolar world will emerge.

The most pressing question regarding the second global age focuses on changes in the global economy, the widespread adoption of ICT, the rise of new global powers, and challenges to existing power structures. This has generated new interactions between states, MNCs, and global institutions. It has created a near-instantaneous flow of information and ideas, as well as disinformation and propaganda. The second global age has also created unresolved tensions. It is easiest to posit these tensions as questions. Will the US continue to retreat from global leadership? If so, who or what will replace them? If not, how will the tension play out between the US and challengers to the throne? Will the growth of international and unregulated finance generate economic prosperity, or will it became a source of instability? Will the internet foster greater equality, or will it create new divisions between the ‘haves’ and ‘have nots’? And perhaps most importantly, will the second global age end in conflict, like the first global age, or will a new status quo in global politics be established?