Causes of the End of the First Wave of Globalization - Coursework Example

Name: Topic: Causes of the End of the First Wave of Globalization Professor: Course: Date due: Causes of the End of the First Wave of Globalization Globalisation is well understood as a universal movement of political, economic, technological and individual connections (Stiglitz, 2002, pg 57). Most countries are said to be globalised when they receive economic empowerment through stable business activities and industrial development. The world has had three waves of globalisation following fiscal stability in the trading sector. It is true that a lot has been said on the causes of such globalisation movements but very little refers on the causes of the end of such economic empowerment. This paper will therefore focus on the causes of the end of the first wave of globalisation. Within this discussion, attention will be paid on the effects of the First World War and the Great Depression which apparently form the foundation of the end of the first wave of globalisation. Most countries were definitely affected by the impacts resulting from these two great events and specifically in the economic sector. However, it will not be prudent enough to explore the causes to the end without establishing some of the characteristics of the wave. Research indicates that the first wave of globalisation was marked by huge transfer of capital and labour, as well as business involvement in goods, commodities and capital products. However, all these activities came to an end in 1914 when the First World War set in. It can therefore be deduced that the First World War had a big negative impact on the economic stability of most countries that got involved in the war, particularly European and Asian states. As a result of this war, global investment flow came to a halt as well as trade patterns (Capling & Galligan, 1992, pg 100). This is from common knowledge that fighting countries could not continue carrying out business between themselves as each wanted to protect their economy and win over the opponent. At that time of the war, much movement of goods was taking place using the German submarine. However, this could not continue as a result of the First World War. The most profound effect of the war came about when the Gold Standard was left to ruin. By the fact that the war prolonged beyond the presumed period, most states decided to abandon the Gold Standard for the one purpose of paying for the war through pursuing a monetary policy which could allow for expansion. This was accomplished through printing of money that ultimately caused great inflation in most countries’ economy. Therefore, the First World War was an intensive war in terms of monetary expenditure putting most combatant countries at risk of economic instability. Although it should be acknowledged that the First World War had mixed impacts on the economy of Australia, the extensive part of it was negative. This is what forms the centre of discussion in this paper since they brought the first wave of globalisation to an end. In the first place, it is realized that the war led to the disruption of trade patterns since most countries could not continue carrying out business with each other at the heart of the war. Following this instability in trade prototypes, there was a profound reduction in the Australian exports to the outside world in countries like Britain, France and Belgium. Even though there was still stability in imports from countries within Asia and the Far East like Japan, reduced exports meant an imbalance in market capital flow. This is because of the falling down of the overall export element of expenditure model. The move had a more negative influence resulting into an economic downturn and therefore, increased unemployment statistics. This required that countries like Australia acted fast enough to recover from economic instability especially in the case of unemployment figures. Studies carried out so far reveal that unemployment figures in for instance Southern Australia rose steadily in 1927 which fell within the period of effects of the First World War. This number even increased to up to 30% more by the end of 1930 as a result of the depressed universal economy (Wallerstein, 2004, pg 47). This is well indicated in the table below. Nevertheless, it is clear that the main cause of the First World War recession was the termination of investment inflow. During this period, asset movements by the central government of Australia remained an imperative element of local asset formation particularly to fund infrastructural development. Another clear issue that can be deduced from the First World War is that there was reduction in overseas loaning as well as borrowing (Maddock & McLean, 1987). The war time economy similarly indicates that there was a fall in infrastructure and other forms of spending like medical expenditure and housing. A large amount of money from the government expenditure was diverted to the war efforts. As a result of this, the country’s economy reduced by almost 10%. The form of contraction seen in the country’s economy occurred only within the four years of the war. This is a clear show of how the First World War deprived the country of globalisation during this critical moment. In addition, the above shown statistics on the rate of unemployment in Australia are taken in 1915, a time which had severe war globally. Results from the war participation data has indicated that young and energetic men took part in the war. This meant that the running of the economy was left into the hands of women. This had a negative impact on the general economic movement of the state. The government turned a peacetime economy into a wartime one (Thomson, 1975, pg 99). Because of this abrupt turns in the economy, industries changed their way of operation as the function of women and the powers of the Commonwealth Government escalated. This follows the government’s assumption to domineer and control attempts of the war. Statistical census of 1911 reveals that about 96% of Australian depended on the British stock. On the other hand, Britain was a major state involved in the war. Australia therefore paid loyalty to Britain by participating in the war against German which was declared in 1914. The involvement was not only in terms of manpower but also fiscal support to Britain. As such, the economy got strained as more cash was required to keep the troops fighting. Contrary to the First World War, The Great Depression is another important factor that facilitated the end of the first wave of globalisation. It is clear that the Great Depression was a time of severe economic downturn for most states around the world. This recession came in close link with the First World War. In Australia, the Great Depression is presumed to have started in 1927 as opposed to the actual date of 1929. The Greta Depression occurring in Australia however cannot be blamed entire on the war; the country itself had a vast cause on the recession. The recession resulting from the Great Depression was apparently profound in four major states that similarly undertook into the First World War. These countries comprised of Germany, France, Britain and the Americas. The effect was nevertheless severe in Germany and Britain (Landes, 2005, pg 14). In the one hand, the Great Depression can be termed as being the result of the First World War. Still, the Great Depression can be taken as a key contributor to the end of the first wave of globalisation. The recession emanating from the Great Depression can still be drawn from the unemployment statistics that were taken in 1915. For most people in Australia, this period was marked with a lot of hardships that started before the collapse of market prices. This depression lasted for a longer period into the Second World War indicating that it slowed down efforts by most states to get industrialised. At the time Wall Street, which is the centre of market trade in New York, experienced disillusioning stock markets, Australia had escalated in its unemployment rates up to 10%. The Great Depression in Australia had both economical and social impacts to the society. Most people in the country lost their homes following lack of jobs and a steady income. This forced them to live in poor sanitation conditions (Albert & Graves, 1988m, pg112). Following the recession, most countries practiced what is referred to as protectionism. In this case, most countries turned away from free trade and focused their production on the domestic industries. Because of such moves, global industrial development was deterred since raw materials became inadequate. An analysis of Australian stock markets reveals that the country had prosperity from 195 to 1929. This is a period in which Australia was undertaking a pre-depression policy. At the same time, the country experienced high export prices which can be said to have slowed down the anticipated globalisation of this country. Within the markets, there was a large volume of exports as well as a considerably uniform though excessive movement of asset which formed the foundation for affluence. However, this prosperity did not take long before the Great Depression set in and brought every dream in business activities to a halt. It is therefore blamed on the Great Depression to have caused the end of the first wave of globalisation (Wallerstein, 2004, pg 61). Bibliography Landes, D. S. 2005. The Wealth and Poverty of Nations. Warszawa: Muza. Said, E. W. 2005. Orientalizm. Poznań: Zysk I S-ka. Stiglitz, J. 2002. Globalisation and Its Discontents. New York, London: W. W North & Company. Wallerstein, I. 2004. World-System Analysis: An Introduction. Duke University Press. Thomson, K. 1975. Australia and the great depression. Sidney: Cassell Australia Indiana University. 2004. Australian economic history review, Volume 44. Sidney: Sydney University Press. Maddock, R. & McLean, I. 1987. The Australian economy in the long run. New York: CUP Archive. Capling, A. & Galligan, B. 1992. Beyond the protective state: the political economy of Australia's manufacturing industry policy. New York: CUP Archive. Davis, L. & Gallman, R. 2001. Evolving financial markets and international capital flows: Britain, the Americas, and Australia, 1865-1914. New York: Cambridge University Press. Albert, B. & Graves, A. 1988. The World sugar economy in war and depression, 1914-40. New York: Routledge. Read More