Innovation

Globalization: The Middle Technology Economy – A 150 Year Journey

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Most people tend to think that today’s global economy has only been around a few years. If you were to read Thomas Friedman’s The Lexus and the Olive Tree or The World is Flat, you would put the current global economy at only decades old. The truth about today’s global economy is that it is the “High Tech Global Economy”. It depends on the Internet and speed of light communication systems joined by a network of trade routes and trade agreements stretching around the world. However, the “Middle Technology Global Economy” came around in the late 1700s through the early 1900s. It all starts in on the plains of England…

The middle technology global economy depended on five things:
1. Coal and Oil
2. Inventions
3. Infrastructure
4. Foreign Markets
5. Violent Critics

Coal
Coal made the steam engine go. It provided the fire that heated the water, the fire fueled factories, and that conquered continents. The countries who had coal thrived, the countries who did not, did not. England’s coal fields first fired up not factories but soon trains. The new United States blossomed in the latter half of the 1800s as its vast resources fueled the taming of a continent. In the 1870s, German speaking peoples united and their wealth of coal propelled them into the Imperial spotlight.

Inventions
The train may have been the single greatest invention of the 19th century. In the US, it would have taken 4-6 months to cross the continent at the start of the 1800s. By the end of the century, it took a week. Alongside the train went the telegraph wires connecting parts unknown to parts known. Information flowed more freely and soon cables were being spread across oceans connecting continents. Where it used to weeks, now took minutes to get information from one side of the world to the other. By the end of the nineteenth century, automobiles, the plane, and the telephone would reshape the economy for most of the 20th century.

Infrastructure
In the low tech tech economy – All roads lead to Rome. In the 1800s, all trains lead to Chicago. A town born out of a swamp in 1837, grew to over a million people in half a century all because of its location. It became the supermarket of the world. From grain to timber to beef and pork, whatever you wanted could be bought in the city by the lake. The I&M Canal connected the Great Lakes to the Mississippi River and the interior of the continent as well as the Gulf of Mexico. The trains kept the products coming. It became the center of the US economy in the 1800s. However, Chicago set the model for what modern cities needed – trains, canals, and products. In the 1900s, it would add two airports and series of interstate highways to further connect it to the heartland.

Foreign Markets
Foreign Markets would result in countless wars in the 1800s and two world ones in the 1900s. As nations fought for resources, the third world became their playground. Europe divided up Africa in Berlin in the late 1800s. The US advanced across the Pacific like frogs on a pond and went forth into the Caribbean as well. Germany wanted its own place in the sun besides the British, French, Dutch, and Belgians. China was divied up like a piece of pie. Japan began to want the trappings of excess as they began to industrialize in the early 1900s. Russia stumbled, bumbled, and fumbled into the 20th century despite the most resources on the planet.

Violent Critics
From anarchists to socialists to communists, critics abounded in the wake of this industrialization. Exploitation of the masses by countries turned into exploitation of the masses by corporations by the middle of the twentieth century. It was hard to tell who was telling who what to do. From Dole to the United Fruit Company to Coca Cola. Revolutions, riots, and progressive reforms dominated the press and the talk in the salons of Europe. Was capitalism all it was cracked up to be? Was the dash for cash worth the cost in lives? Was labor going to stand for it? Would consumer societies keep buying for eternities? Would what happened to Czar and his family happen to all the Kings and Queens of Europe? A depression in the 1930s brought about totalitarian leaders in Europe – leaders who could keep law and order amidst the financial chaos. The resulting backlash after World War II saw welfare states and regulated economies (Keynesian Economics) across the continent. Socialism grew throughout Europe and Communism spread across the globe but mainly in third world nations.

The End
Fredrich Hayek thought in simple terms. The less control the better. He believed in free markets with no control. Throughout the 1950s, 60s, and 70s, the wealthy nations of the world struggled to stay afloat economically. The gap between socialist nations and communist nations was evident, but socialist nations struggled with debt. Along came two leaders- Margaret Thatcher and Ronald Reagan – who followed Hayek and believed in his principles. They, too, met with violent protest when they espoused philosophies from The Road to Serfdom. The Chicago School of Economics came to play a major role in the 1980s and 1990s and globalization.

Free Trade and Free Markets would signal in the rise of the High Tech Economy along with the Internet, fiber optics, mechanization, and the Rise of India and China in the 1990s.


For Further Reading

Commanding Heights – The Battle for the World Economy
Freakanomics

Globalization: The Low Tech Economy – A 500 Year Journey

Globalization: The Low Tech Economy – A 500 Year Journey

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Most people tend to think that today’s global economy has only been around a few years. If you were to read Thomas Friedman’s The Lexus and the Olive Tree or The World is Flat, you would put the current global economy at only decades old. The truth about today’s global economy is that it is the “High Tech Global Economy”. It depends on the Internet and speed of light communication systems joined by a network of trade routes and trade agreements stretching around the world. However, the “Low Tech Global Economy” has been around for thousands of years. It all starts in Ancient Rome…

Sentaus Populus Que Romanus, or the Senate and People of Rome, started what we know of as the world economy. In fact, we could even go back to Greek and other Mediterranean traders as the instigators of a world economy. But it was Rome that really brought specialization to the process. It would bring in wheat and other fruits from Egypt. In fact, the richest Romans were importers and exporters. Along with this system, the Roman monetary system of coinage helped to bring about a system where goods had constant value in different parts of the Empire. Perhaps the Roman’s greatest achievement was their linkage of northern and western Europe to Asian and African trade networks. By the 5th century, all roads may have lead to Rome, but the shift had begun to Constantinople and Jerusalem.

The next great achievement in global trade came under Islamic empires. While Europe was sleeping during the Middle Ages, the world kept going. Islam’s massive achievements in trade included the following concepts: trading corporations, contracts,  partnerships, and the earliest forms of credit, checks, savings accounts, pawning, loaning, and exchange rates. It is an amazing set of accomplishments that lays the foundation for capitalism but also global trade. However, it was also the Ottomans who cut off trade between East and West in 1453 thereby prompting the Kings and Queens of Europe to find an alternate route to East Asia (It is ironic that China and India also had the products and services everyone was vying for in the 1400s as well as today).

Once Columbus hit the water and then the beaches of The Bahamas, the global trade network hit full force resulting in a triangular trade between Europe, the Americas, and Africa with Europe benefiting the most while Asian countries were left out in the cold. The Slave trade may have been at the heart of the global economy, but the root of it was money. The resulting effect of the Ottoman’s cutting off trade was the rise of Europe as a trading power and the rapid decline of Asia in the world economy. For Africa, the slave trade dominated western and central kingdoms as they tried to maintain their power in the face of new technologies. For the Americas, a Native population estimated between 20-25 million is almost wiped out in 300 years and natural resources and soil plundered in the name of cash crops, fish,  furs, forest products and other minerals.

Looking at maps of the territory the Spanish, British, French, and Dutch claimed is to look at the world.
Spain

Great Britain

France

The Dutch

This “Low Tech” world trade system under the yolk of Imperialism resulted in the stuffing of pockets of those back in Europe along with continuous conflict in Europe and around the colonial world between the powers. America’s first successful British settlement in 1607 was funded by the Virginia Company, a British corporation. The taxation over the result of the French and Indian War (fighting over the lucrative fur trade in in the Ohio Valley) leads directly to the American Revolution. The “Low Tech Global Economy” moved rather slowly. Every once in a while there would be an achievement or innovation that moved it up a few notches; the train, the telegraph, the telephone or the automobile.

By the time 1900 rolled around, there were more players on the world stage including the US, Japan, and Germany who would come to dominate global and economic affairs for the next 100 years. China and India would reemerge in the late 1990s and early 2000s as well as Middle Eastern Oil conglomerates. The 1900s would see two World Wars, a Cold War, and boom in information services and a use of natural resources that are reshaping the world as we speak.

As the “High Tech Global Economy” moves forward, what new forms of transportation and communication will it spark? What countries will be left in the dustbins of history? Will we see old powers fall by the wayside as innovation in energy passes them by? Its easy to look at Globalization as a part of history that is an ever growing arc. However, it is hard to look the present and where it is going from within. The High Tech Global Economy, after all, is only 14 years old. Imagine what it could look like in 500 years.