To What Extend did the Great Depression Setback the Globalizing Process - Essay Example

To What Extend did the Great Depression Setback the Globalizing Process? Student’s name Institution’s Affiliation Course +Code Professor’s name Date Introduction The Great Depression in the 1930s was instigated by several economic faults and had severe consequences to world’s growth and development. One of the global facets of development that was impacted by the downturn was globalisation. Before the depression, globalisation had removed economic diversities that existed among different national economies. Previously, the failure of one economy could not impact another because of the concept of separateness of these economies (Baldwin 2006). Again, diversity implied that nations could not copy each other’s mistakes or get into international conventions that may replicate such mistakes. However, globalisation pressure forced many governments to liberalize their markets so that they can enjoy the economic boom of the late 1920s. Imperatively, the occurrence of the Great Depression slowed the globalization process for a while and became an obstacle. However, this essay argues that the Great Depression did not stop the wheels of globalisation. In the late 1920s, most economies were globalized, perhaps more than they are today. With the end to the Great War, banks were deregulated and eventually most of these economies witnessed a boom in the 1920. Effectively, banks gave up the control of money supply and used gold as the standard in trade (Berend 2016). This standard was mainly managed by the United States and Great Britain. Further, conversion rates between different currencies and gold were controlled and regulated. For instance, large companies controlled steel production, mining, and shipping on a global basis. As a result, banks lent to organizations across their boundaries that included frontiers and got their security in terms of gold (Hansen 2015). Again, the international trade was largely oiled by export guarantees. These economic activities allowed the globalisation process to spread in different economies. It can be argued that the Great Depression did not stop the wheels of globalisation in the banking and financial market. Amadeo (2016) discloses that when the great depression occurred the use of gold standard currency was suspended. This is because economic experts argued that the introduction of gold spearhead the Great Depression. After the suspension, people begun to hoard the gold. The implication was that the world experienced a chaotic monitory and financial system. Analysts therefore proposed that the only way to solve the problem was to go back to the use of gold. In addition, banks continued to lend money to various players in different parts of the World (Amadeo, 2016). It can, therefore, be argued that Great Depression did not stop the wheels of globalisation. Secondly, the globalisation process was advanced by Western culture attributes like the English language, dress, American films and western financial and manufacturing methods. These ideas were spread across the world, especially by the European governments that conquered and colonized other regions and people. These empires ascertained that this globalizing influence must be felt to the furthest corners of Africa, South East Asia and India among other regions. Thirdly, globalisation spread through the movement of vast sea vessels that carried people and goods to every part of the world. As a result, the new world order allowed everybody to be more prosperous as money, different cultures, and manufactured products flowed with any obstacles across the globe. Most economists and pundits praised the virtues and inevitability of the 1920s and 1930s globalisation (Narasaiah, 2008). Imperatively, the tenets of globalisation were not confined to the economic boom of the 1920s. However, the collapse of the global financial system and the subsequent depression meant that nations could not shield themselves from the vagaries of one global financial system. The economic boom in the 1920s had led to widespread development in different areas like infrastructure and connectivity (McElvaine 1993). People could travel around the world more easily and conveniently to share and interact with others. People shared ideas, cultures and traditions. It was an opportunity that allowed them to understand other cultures and new places while others learned new ideas. However, even before the economic boom of 1920s and its subsequent collapse that necessitated the great depression, globalisation had occurred during the industrial revolution, especially among Europeans and Americans as they attempted to increase their knowledge about the world. Again, industrialists looked at this period as very essential in the production of quality goods in large quantities. When the benefits of the industrial revolution slowed down, it didn’t imply that the globalization process would stop. It only meant that it could be slowed down because of the prevailing economic conditions that did not allow people to have surplus income to spend on travel and tours. When the Great depression occurred, it can be argued that the globalization movement had already stabilized itself in many regions of the World, as a result, the Great Depression did not stop the wheels of globalisation. According to one of the well-known globalisation historians, James Harold, globalisation is an irreversible and inevitable process that is not easy to collapse and come to an end, especially in a world where technology has allowed us to access more information than before (Harold 2009). James postulates that the last age of globalisation was destroyed by the Great Depression and political upheavals of the 1930s. Accordingly, James offers two common explanations for the economic collapse during the time. These include rising volume and volatility in the flow of capital as a result of unsustainable busts and booms, and the fear that engulfed the world because of the spread of globalisation. James is categorical that these fears, whether real or hypothetical, provoked both social and political backlash that made people view globalisation as a process that could not sustain itself or allow nations to grow (Ivanova 2016). However, James offers another perspective, equally important, in the analysis of these global trends. James states that institutions and individuals, especially in the political circles, were overwhelmed by the pressures and consequences of a globalized world. These pressures and consequences burdened a majority of these institutions as they experienced financial crises. James notes that these resentments from the financial institutions were capitalized on by the political class who were keen at settling political scores at the expense of a social movement that could not be stopped; globalisation. It suffices to note that while James’ candid exploration and discussion on what caused the financial crunch of 1920s is valid, he does not offer much insight on if the Great Depression led to the collapse of globalisation process. In an honest opinion, one would say that the Great Depression and its consequences affected many facets of globalisation, especially the ability of banks to lend to international organisations to set up operations in developing economies. The credit crunch problem implied that many organisations could not recruit and expand from their domestic economies. As a consequence, the limited movement of people and interaction may that indeed the globalizing process was slowed down (McElvaine 1993). Again, these pressures and skewed opinions from governments and individuals were aimed at creating fear and unnecessary panic that indeed globalisation cannot work. For instance, despite the collapse of the economies, many people continued interacting through their travels around the world. Further, governments, especially those who viewed globalisation as beneficial to their domestic economies strived to revive their economies, not by shielding them but making them more open to diversity in ideas and personnel. It is on this basis that one cannot postulate that the Great Depression did not have an impact on the globalisation process. However, the impact was witnessed as a result of a momentary slowdown but such a slowdown was incapable of stopping the wheels of globalization. The impacts of the Great Depression, just like the Global Financial Crisis in 2008, were severe that any socio-economic and political system stood to be adversely affected. It is based on this premise that global players must view global systems in a much broader way than just the economic benefits that they provide. When nations collapse their economic interests into one huge body, for instance, the European Union or the Euro Zone, they must be ready to deal with the vulnerabilities that arise from such creations. According to Harold (2009), this position does not imply that an isolationist approach to international cooperation is either good or bad. It implies that nations should not engage in international witch hunt with the purpose of creating instability, especially one that affects globalisation. As witnessed, the Great Depression affected many people especially in Europe and the United States. However, globalisation process was the only viable option that these countries could use to revive and stabilize their economies. A globalized world offers increased opportunities to those who seek to exploit them in different socio-cultural environments. Further, such opportunities present similar challenges that nations and individuals cannot ignore. The Great Depression affected nations’ ability to offer enhanced services to their citizenry while financial organizations could not lend to spur spending by individuals and organizations. Secondly, the Great Depression slowed down technological development since scientists could not mobile resources to conduct research and offer most appropriate solutions to advance in many areas (Kehoe & Prescott 2002). The limitations brought about by a cash crunch, high unemployment levels and closure of many industries meant that countries must formulate protectionism policies to safeguard their economic interests and ensure that their populations could not be impacted by the vagaries of a total or near total collapse of the entire global financial system. The collapse of the international financial systems meant that investors lost their money, stock markets tumbled and debt levels increased drastically. It is on this premise that international interactions slowed down as resource strains implied that individuals could not afford the opportunities to not only interact but share ideas; the foundational tenets of globalisation. As a result of the near collapse off the international financial system, nations became cautious and opted to have a different approach to global financial inclusivity and production (Hirst et al., 2015). Imperatively, nations opted to form trading blocs, create bilateral conventions and enhanced exchange controls. The implication of these events meant that true globalisation could not occur because of regional interests aimed at protecting national and regional economies from the vulnerabilities of a globalized financial system. Imperatively, the globalisation process was slowed down but not stopped. Conclusion Globalisation process provided more opportunities before the Great Depression than it does today since nations are keen on avoiding a total collapse of their financial systems. Countries are keen on ensuring that globalisation does not wipe away their gains and allow other people to benefit from them. Imperatively, the effects of the Great Depression impacted the process because of the huge financial losses that industries, individuals and governments incurred. However, the Great Depression did not stop the globalisation process. References Amadeo, K 2016, What Is the History of the Gold Standard, The Balance. Baldwin, R 2006, Globalisation: the great unbundling (s). Economic Council of Finland, 20(3), pp.5-47. Berend, I.T., 2016. An economic history of twentieth-century Europe: economic regimes from laissez-faire to globalization. Cambridge University Press. Eichengreen, B. and Temin, P., 2000. The gold standard and the great depression. Contemporary European History, 9(02), pp.183-207. Harold, J., 2009. The End of Globalisation: Lessos from the Great Depression. Cambridge, MA: Harvard University Press. Hansen, P.H., 2015. Hall of mirrors: the great depression, the great recession, and the uses— and Misuses—of History. Business History Review, 89(03), pp.557-569. Hay, C. and Marsh, D. eds., 2016. Demystifying globalization. Springer. Hirst, P., Thompson, G. and Bromley, S., 2015. Globalization in question. John Wiley & Sons. Ivanova, M.N., 2016. Profit growth in boom and bust: the Great Recession and the Great Depression in comparative perspective. Industrial and Corporate Change, p.dtw013. Kehoe, T.J. and Prescott, E.C., 2002. Great depressions of the 20th century. Review of Economic Dynamics, 5(1), pp.1-18. McElvaine, R.S., 1993. The Great Depression: America, 1929-1941. Broadway Books. Narasaiah, M 2008, Globalisation and Economic Development, Discovery Publishing House. O’Rourke, K.H. and Williamson, J.G., 2002. When did globalisation begin? European Review of Economic History, vol.6, no.1, pp. 23-50. Read More