by Kevin Reilly
Soviet Industrialization . The Soviet Union under communist rule experienced the first major breakthrough in twentieth-century industrialization. Building on the modest industrial development of tsarist Russia, Soviet authorities, under Stalin’s leadership in the 1930s, developed a unique pattern of industrialization. Unlike Western countries, which had relied largely on the market and private enterprise, the Soviets created the first modern command economy based on state ownership and central planning. Treating the country’s economy as a whole, a series of Five-Year Plans established overall goals and determined what items should be produced, in what quantities, and at what price. It was an enormous undertaking, made even more so as Stalin forced the pace of industrial growth by increasing the production targets and then urging factory managers to exceed even these high goals. The first Five-Year Plan, he demanded, had to be completed in four. Furthermore, Soviet industrialization took place largely in isolation from the rest of the world economy. Some engineers, skilled workers, and current technologies were imported from the West, but for the most part it was Soviet workers, capital, resources, and management that generated the extremely rapid economic growth that put the Soviet Union by 1948 in second place in world manufacturing output behind only the United States.
Distinctive labor policies also marked Soviet industrialization. Women were mobilized for factory work far more extensively than in the West although without much of a reduction of their domestic responsibilities. Millions of prisoners—Stalin’s “enemies of the revolution”—were also conscripted from the widespread network of labor camps in a uniquely Soviet version of modern slavery or forced labor, which contributed much to mining, construction, and industrial projects in the remote reaches of the country. While the Soviet system clearly exploited its factory working class through low wages and harsh working conditions, it also celebrated urban workers as the leading group in the new socialist society and increasingly supported them with access to education, guaranteed work, medical care, housing, pensions, and leisure opportunities.
Industrialization in European Offshoots . A further extension of industrial society took place in several countries dominated by European immigrants—Israel, Canada, Australia, New Zealand, and South Africa. All of them used Western capital investment to develop manufacturing facilities while continuing to rely on the export of food or minerals. And each of them generated high standards of living, at least for their European populations.
Newly Industrialized Countries . Perhaps the most remarkable and surprising newcomers to industrialization have been the Pacific Rim countries, led by South Korea and Taiwan but including the city-states of Hong Kong and Singapore as well. Historians and other scholars have struggled to explain why these East Asian societies experienced such rapid economic growth beginning in the 1960s such that by the 1990s they had scrambled into the “club” of industrial nations. Some have emphasized their Confucian cultural traditions, derived from contact with China, which emphasized deference to authority, collective loyalties, and hard work. The influence of an economically successful Japan was also important. In Korea, for example, Japanese-style group exercises frequently began the workday, and solemn ceremonies marked the launching of a new tanker or the shipment of a fleet of cars. Others have pointed to a set of favorable international circumstances. South Korea and Taiwan became bastions of an American-sponsored anticommunism in East Asia following World War II and benefited from a great deal of U.S. aid. Furthermore, a booming world economy from the mid-1950s to the mid-1970s greatly assisted an industrialization strategy focusing on exports. Strong authoritarian governments provided social stability, low wages, and overall planning in capitalist economies that were more controlled than those of the West.
Whatever explains East Asian growth after World War II, it became clear that industrialization was certainly not limited to societies shaped by European culture. As the century ended, India joined China as major centers of industrial growth in the global South. Major industrial sectors likewise took shape in Turkey, Brazil, Mexico, Indonesia, Thailand, and elsewhere, demonstrating the compatibility of many cultural traditions with modern economic life.
From Divergence to Convergence . From its beginnings in the eighteenth century, the industrial revolution benefited the industrializers in the West at the expense of much of the rest of the world. The fortunes of rich and poor diverged. This imbalance began to correct in the late nineteenth century as Japan joined the club of industrial powers. By the late twentieth century, the East Asian economies of Taiwan and South Korea had also joined in. But China and India, together representing more than a third of humanity, had continued to diverge further by growing at a much slower pace than the West.
During the first decade of the twenty-first century, that process of divergence reversed. Like their East Asian predecessors, the two giants of Asia began to grow faster than the West. In the wake of a financial crisis in the United States and Europe in 2008, Western economies grew at a rate that barely kept up with population, while China and India marched ahead at more than 10 percent a year. Between 2005 and 2010, the economies of the emerging world grew at 41 percent. China grew 70 percent, and India grew 55 percent. In the same period, the advanced economies had grown only 5 percent. World economies were beginning to converge. The average output per person in China was still only about a fifth of what it was in the United States, but it had been a twentieth in 1990.5 For much of the world (though still not in Africa or the Middle East), the great divergence of the past 200 years was coming to an end.
A Densely Connected World
Global industrialization vastly accelerated the economic integration of the earth’s many peoples. Developments in transportation and communication technology tightened global networks. The telephone, radio, television, cassette tape recorders, movies, satellite-based communication, and most recently the Internet allowed ideas, social practices, and vast sums of money to circulate as never before. Furthermore, automobiles, passenger airplanes, superfreighters, and containerized shipping allowed far more people and goods to move far more rapidly and at less cost than ever before.
At the heart of economic globalization has been an enormous increase in international trade, in the flow of capital around the world, and in the activities of huge firms known as multinational or transnational corporations. These processes fluctuated considerably in the past century. A spurt of economic globalization, associated with the extension of European empires into Asia and Africa in the nineteenth century, dropped off sharply after 1914 as World War I and the Great Depression played havoc with international trade. In the aftermath of World War II, however, the pace of globalization picked up dramatically. Between 1947 and the early 1990s, the value of world trade increased from $57 billion to some $6 trillion annually. By the beginning of the twenty-first century, modern telecommunications made it possible to transfer capital instantly almost anywhere in the world.6 Transnational corporations with facilities in many nations accounted for a great deal of this economic activity.7 An IBM personal computer, advertised as “made in the USA,” actually had 70 percent of its components manufactured abroad, while an equal 70 percent of “Japanese-made” televisions were manufactured outside of Japan. These new global corporations, with enormous financial resources, moved production sites and the jobs they generated to wherever wages and taxes were lowest and environmental regulations the least stringent. Treating the globe as a single market, they paid little attention to the impact of their activities on local communities and environments.
All this has meant a substantial shift in power from nation-states to world markets. Alongside national governments, other organizations with little loyalty to particular nations have assumed powerful roles—international banks, trade associations, producers groups such as the Organization of Petroleum Exporting Countries, world news services like CNN, and especially transnational corporations. Competition for “market share” among these huge global firms became at least as important as poli
tical and military rivalry among sovereign states. International economic organizations such as the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO)—all of them dominated by the wealthier industrial countries—came to play a major role in the global economy.
Germs could also travel the tightening links of the global network. A worldwide flu epidemic in 1918 killed in excess of 20 million people, more than twice the number who perished in World War I. Later in the century, AIDS was the most potent global epidemic, claiming victims on every continent and producing more than 25 million deaths between 1981 and 2008. Man-made diseases of the natural environment such as air pollution, acid rain, global warming, and thinning of the ozone layer likewise respected no national boundaries.
A Deeply Divided World
Global industrialization and modern economic development have occurred in a highly uneven fashion. We have mentioned the economic divergence that industrialization created between the rich countries of the world—mostly in western Europe, North America, and Japan—and the poor countries of Asia, Africa, the Middle East, and Latin America. In the roughly two centuries since Europe’s industrial revolution began, the economic divergence of the world’s societies has been remarkable and rapid. In 1800, the average income of the richest country in the world was about two times that of the poorest; in 1900, about nine times; and in 2000, 60 times or more. During the twentieth century, the wealthiest countries, representing about 25 percent of the world’s population, increased their per capita incomes sixfold, while the poorest 25 percent of the world’s population increased their incomes only threefold. Thus, the gap between them grew rapidly.8 This novel division between the rich and poor countries became one of the most prominent features of the past century, shaping the life opportunities of virtually everyone as well as structuring the political, military, and economic relationships among the nations of the world. We are only recently seeing signs that this process is beginning to reverse.
Progress for the Poor . Despite this global divide, the economies of many poor countries grew substantially, improving the lives of many millions during the course of the twentieth century, especially the last half. “More progress has been made in reducing global poverty in the past five decades than in the previous five centuries,” declared the UN Human Development Report in 1997. “Since 1960, the world’s developing countries have cut child death rates in half, reduced malnutrition by a third, and raised school enrollments by a quarter.”9 Even in the poorest countries, average life expectancy increased by a decade or more since 1950. Some newly industrialized countries and some wealthy oil-producing countries have achieved standards of living comparable to those of the West. China’s revolutionary redistribution of land in the 1940s and 1950s, coupled with its booming internationalized economy in the 1990s and first decade of the twenty-first century, lifted tens of millions of Chinese out of wretched poverty. In India since independence from colonial rule, grain production more than kept up with rapid population growth, and widespread famines largely disappeared. Since opening the economy to international markets in 1990, India has begun to regain its earlier place in world trade. By 2010, the Indian middle class numbered 300 million (a quarter of the country) and was increasing at 5 percent a year.
Failures and Instabilities . These achievements are far from the whole story, however. Africa in particular has experienced a dismal record of economic development, especially since the mid-1960s, far worse than other developing regions of the world. It has been plagued by massive poverty, recurring famines, endemic political instability, and the most severe outbreaks of the AIDS epidemic. In the 1980s, per capita income in Africa, Latin America, and the Middle East actually contracted, and living standards dropped sharply for many people in these areas. Surging population growth in many places pushed the number of severely impoverished and often malnourished people to well over 1 billion people by the 1990s, close to 20 percent of the world’s population. In addition, civil war and ethnic hostilities displaced and made homeless tens of millions, most of them in the poorest countries. The bitter conflict in Rwanda between the Hutu and Tutsi people made refugees of about 2.5 million people, fully a third of the country’s population. In the former Soviet Union after the collapse of communism, a dramatic economic contraction eroded health care, cut male life expectancy sharply, and impoverished millions. Finally, the instabilities of a globalized economy became apparent in a series of acute financial crises in Mexico, Argentina, Thailand, Indonesia, and South Korea in the late 1990s. Foreign investors quickly pulled large amounts of capital out of these relatively prosperous developing countries, causing severe economic contraction, many bankruptcies, and loss of income for millions. When a debt crisis centered in the United States and Europe shook global markets in 2008, the impact of the “Great Recession” that followed was less severe in developing countries like Brazil, Russia, India, and China.
Internal Inequalities . Economic inequalities within countries grew along with the increasing divide between rich and poor countries. Even in the poor countries of the Third World, some classes of people became wealthier: large-scale farmers producing for the international market, urban businessmen, government officials, educated professionals, and some traditional elites. In some African countries, such people were sarcastically referred to as the “waBenzi” because of the Mercedes-Benz cars in which they were chauffeured about. Far more numerous than these highly privileged groups were masses of impoverished people. The hundreds of millions who were attracted to the growing urban centers of developing countries found themselves working sporadically or for very low wages and living in shantytowns. Millions more tried to survive on small pieces of land in rural areas, where their lives were tied ever more tightly to the fluctuations of the international economy. This was “modern poverty” occurring in societies where billboards, radios, television, newspapers, and the extravagant lifestyle of both foreign and local elites made it clear that such conditions were not the fate of everyone. More than ever before, twentieth-century poverty was relational, as growing numbers of poor people were able to compare their lives with those of the wealthy.
Debating a Mixed Record . Why have some countries prospered more than others? Historians disagree. Some point to various historical legacies, such as the slave trade and colonial rule, or to very different geographical conditions, such as rainfall, soil fertility, or natural resources, as a way of explaining sharp differences in economic performance. Others have emphasized the importance of state policies, suggesting that individual countries have the ability to shape their own destiny by pursuing a wise course of action. What constitutes wise policies is of course hotly contested. Should poorer countries seek foreign capital and involve themselves actively in international trade, or should they try to develop on the basis of their own resources, at least somewhat insulated from the world economy? Should governments actively regulate their economies and societies to foster greater equality and to protect the poor, or will economic growth, benefiting everyone in the long run, flourish better in a “free market” environment? Defenders of the global spread of markets argue that free trade has allowed the poorer countries to gain access to the technology, capital, and markets of the more wealthy. Globalization’s many critics counter that it has exacerbated the world’s inequalities, heightened economic instability, impoverished millions, and subordinated the world’s poor majority to the interests of its wealthy minority.
Alternative Globalizations . While debates about globalization continued, protests against the inequities of the global economic order increased. Intellectuals in the West and in developing countries alike articulated a powerful critique of the prevailing world system, focusing often on the policies of the World Bank and the IMF and on the activities of transnational corporations and the U.S. government. From the 1960s on, church leaders in Latin America, for example, developed a “theology of liberation,” finding in Christian teachings the basis for action on behalf of the
world’s poor. They and many others argued that there were viable alternatives to a purely marketdriven approach to global development and advocated policies more sensitive to workers’ rights, to the environment, to corporate responsibility, to protecting the poor, and to global equality generally.10
Beyond small groups of intellectuals, protesters in many countries (Indonesia, Argentina, Zambia, for example) took to the streets when their governments, acting under pressure from the IMF, cut food and fuel subsidies on which the poor depended. Opposition to the North American Free Trade Agreement was among the grievances that prompted a major peasant revolt among the Mayan people of southern Mexico in 1994. Believing that the agreement would require Mexico to privatize all communally owned land, to reduce spending on schools and health care, and to cut loans to farmers producing for the internal market, the Zapatista rebels called it a “death sentence for the indigenous people of Mexico” and were harshly critical of a Mexican government that supported it. In 1999, protests in the streets of Seattle by trade unionists, religious and environmental activists, and student groups disrupted a meeting of the WTO while calling for major reforms in the relationship between wealthy and poor countries. The election of left-leaning presidents in several Latin American countries such as Venezuela, (1998), Brazil (2002), Ecuador (2002), Bolivia (2005), and Guatemala (2006) provided further evidence of resistance to unfettered market globalization.
