Notesale: Turn your study into money

Document Preview

Extracts from the notes are below, to see the PDF you'll receive please use the links above

---

A Brief History of the Global Economy
Part 1 - Pre-Historic to the Modern Period
Pre-Historic Economies

• The beginnings of organisation and ‘economies of scale’

• Defined by hunter-gatherer communities - relatively mobile, moving on when
resources were depleted

• Some evidence of rudimentary bartering when bands met - basic form of trading

• Largely subsistence related - economic activity is about survival rather than about
profit

• No evidence of any form of economic organisation - trading very informal

• Isolation

Agriculture and Urbanisation

• The first ‘efficiency drive’

• Both nomadic and settled groups - tribes which eventually developed into early
forms of nation states

• Laid the foundation for permanent settlements and cities

• Economic activity became increasingly formalised (part of permanent settlements)
and spatially extensive

• Ultimately the formation of states

Civilisation and Early Empire(s)

• The economy of the Roman Empire (0AD) was spatially extensive but by no means
global

• Despite the relative longevity of early civilisations (including Han China) they were
limited

• Trade occurred between Europe and Asia, as well as certain parts of Africa but…

• No contact between the Americas/Australasia and trade was profoundly Eurasian

• These Empires cultivated religion, technology and expansion - increasingly global
economy, limited only by the capacities of technology at the time

The Silk Route

• In about 100AD an East-West corridor was opened across the Eurasian land mass

• Linked the Roman Empire in the West with the Han Empire in the East

• Trade was overwhelmingly dominated by precious metals and luxury goods (silk and
spices)

• The route remained at the heart of East-West relations for over a thousand years the first established intercontinental trade route

The Medieval Period (c
...
g
...


• These were necessary but only impactful when combined with institutional and
socio-political changes

• Demography was important - insufficient workers and/or imbalanced resource/
population ratio important in preventing expansion of formal economies

• Law of diminishing returns encouraged territorial expansion through colonisation
(e
...
Moors in Southern Spain)

Situation at the Turn of the 15th/16th Century

• Shift in focus away from the Mediterranean and Northern Italy toward North Western
Europe

• Spain and Portugal still important due to their strong trade links and colonies in the
New World and East Asia

• By the end of the 17th Century, the Mediterranean was backward, the Dutch were
leading the way in terms of trade and commerce and the hitherto unimportant
economy of England emerged to challenge the Dutch

A Conceptual Interlude: Core and Periphery

• There was no truly ‘global’ capitalist economy before the 16th Century

• Core - skilled labour, production of capital, intensive production (North West and
North East Europe)

• Semi-Periphery - contained aspects of core and periphery activity (Mediterranean
Europe, Eastern Europe, Africa)

• Periphery - no capital production activities (The New World)

Mercantile and Industrial Colonialism

• 16th Century - Concentrated in the core (Dutch, British, Spanish, Portuguese, etc
...
g
...
1780s - end of 19th Century

• Laissez-faire economic development

• Cottage Industry (craft production) - Factory System (machino-facture)


• This change sparked the beginnings of organised wage labour, the rise of the USA
and the start of the ‘Gilded Age’

Overview

• Economic activity has gradually expanded over time

• Drivers of this were technological innovation, emergence of the modern state system
and the struggle for commodities and resources

• The Age of Empire played an enormous role in producing a truly global economy,
linking Africa, Europe and the Americas

Part 2 - Foundations of the Contemporary Economy
Revolution and Industrialisation

• 1770s/1780s - at this time Britain was the leader in productivity

• Essentially a movement away from merchant capitalism (defined the times of Early
Empire and exploration) toward industrial capitalism (based upon enhanced
production and transformation of raw materials in increasingly intensive ways)

• The ‘Industrial Revolution’ was crucial in reorganising the global space economy

• Driven by the investment of profit from mercantile activity into productive technology
by entrepreneurs/engineers/inventors

• Demand for basic commodities such as cotton drove these innovations

• Key developments included:

• Kay’s flying shuttle (1733)

• The spinning jenny (1765)

• James Watt’s steam Engine (1782)

The Rise of the Factory System

• Machine advances laid the foundations for socio-economic change

• Semi-automated processes, driven by the technological advances and innovations,
replaced traditional artisanal processes

• Led to increased efficiency - less people to produce greater quantities in less time

• Factory enabled these advances to be exploited fully

• Led to a specialisation of labour and the creation of the ‘division of labour’

• Concentration of labour in factories led to rapid urbanisation and the emergence of
cities such as Manchester

• For example, ship building in the North East of England

• Rise of factories led to a rapidly changing social landscape in Britain, as well as
establishing the country as the world’s ‘powerhouse’ of production

The Division of Labour

• Adam Smith’s ‘Wealth of Nations’ (1776)

• Argued that by dividing the labour process, productivity would increase
exponentially (requires less skill at each stage of the production process)

• This was great for industrialists

• However, it also created new, unexpected social problems…

The Pin Factory Example

• Adam Smith argued that a single worker, working at home, would be lucky to make
one pin a day from beginning to end

• But 10 workers in a factory can divide the 18 tasks between them and increase
productivity

• Therefore, 10 workers operating in this way could produce 48,000 pins a day


New Problems…

• Two obstacles remained from the days of merchant capitalism

1
...
Law of diminishing returns - whereby investment in a part of the production
process adds incrementally less value (more and more money is needed to
produce products which are worth only small amounts more)

• Growth demands more growth and new markets

• Working classes, the proletariat, became increasingly restless due to low wages,
poor working conditions and fewer jobs (growth was so quick there was no time to
effectively plan housing, etc
...
Pursuing new ways of maximising economies of scale - factories themselves
got bigger to reduce costs

2
...
Penetration of new markets (overseas) for existing products

4
...
g
...
g
...
g
...
g
...
g
...
4% per
year (Held et al

---