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Industrialization, the process of converting to a provision of food for a larger nonagricultural population,

socioeconomic order in which industry is dominant. (2) economic changes that resulted in a wider distribution
of wealth, the decline of land as a source of wealth in the
How or why some agrarian societies have evolved face of rising industrial production, and increased
into industrial states is not always fully understood. What international trade, (3) political changes reflecting the
is certainly known, though, is that the changes that took shift in economic power, as well as new state policies
place in Britain during the Industrial Revolution of the corresponding to the needs of an industrialized society,
late 18th and 19th centuries provided a prototype for the (4) sweeping social changes, including the growth of
early industrializing nations of western Europe and North cities, the development of working-class movements, and
America. Along with its technological components, (e.g., the emergence of new patterns of authority, and (5)
the mechanization of labour and the reliance upon cultural transformations of a broad order. Workers
inanimate sources of energy), the process of acquired new and distinctive skills, and their relation to
industrialization entailed profound social developments. their tasks shifted; instead of being craftsmen working
The freeing of the labourer from feudal and customary with hand tools, they became machine operators, subject
obligations created a free market in labour, with a pivotal to factory discipline. Finally, there was a psychological
role for a specific social type, the entrepreneur. Cities change: confidence in the ability to use resources and to
drew large numbers of people off the land, massing master nature was heightened.
workers in the new industrial towns and factories.
The First Industrial Revolution
Later industrializers attempted to manipulate
some of these elements. The Soviet Union, for instance, In the period 1760 to 1830 the Industrial
industrialized largely on the basis of forced labour and Revolution was largely confined to Britain. Aware of their
eliminated the entrepreneur, while in Japan strong state head start, the British forbade the export of machinery,
involvement stimulated and sustained the entrepreneur’s skilled workers, and manufacturing techniques. The
role. Other states, notably Denmark and New Zealand, British monopoly could not last forever, especially since
industrialized primarily by commercializing and some Britons saw profitable industrial opportunities
mechanizing agriculture. abroad, while continental European businessmen sought
to lure British know-how to their countries. Two
Although urban-industrial life offers Englishmen, William and John Cockerill, brought the
unprecedented opportunites for individual mobility and Industrial Revolution to Belgium by developing machine
personal freedom, it can exact high social and shops at Liège (c. 1807), and Belgium became the first
psychological tolls. Such various observers as Karl Marx country in continental Europe to be transformed
and Émile Durkheim cited the “alienation” and “anomie” economically. Like its British progenitor, the Belgian
of individual workers faced by seemingly meaningless Industrial Revolution centred in iron, coal, and textiles.
tasks and rapidly altering goals. The fragmentation of the
extended family and community tended to isolate France was more slowly and less thoroughly
individuals and to countervail traditional values. By the industrialized than either Britain or Belgium. While Britain
very mechanism of growth, industrialism appears to was establishing its industrial leadership, France was
create a new strain of poverty, whose victims for a variety immersed in its Revolution, and the uncertain political
of reasons are unable to compete according to the rules situation discouraged large investments in industrial
of the industrial order. In the major industrialized nations innovations. By 1848 France had become an industrial
of the late 20th century, such developments as power, but, despite great growth under the Second
automated technology, an expanding service sector, and Empire, it remained behind Britain.
increasing suburbanization signaled what some observers
Other European countries lagged far behind.
called the emergence of a postindustrial society.
Their bourgeoisie lacked the wealth, power, and
There were also many new developments in opportunities of their British, French, and Belgian
nonindustrial spheres, including the following: (1) counterparts. Political conditions in the other nations also
agricultural improvements that made possible the hindered industrial expansion.
Germany, for example, despite vast resources of Phase 1: The Early Voyages of Exploration &
coal and iron, did not begin its industrial expansion until Colonization
after national unity was achieved in 1870. Once begun,
Germany’s industrial production grew so rapidly that by the Phase 2: The Age of Transnational Integration
turn of the century that nation was outproducing Britain in
The second phase of globalization covers the
steel and had become the world leader in the chemical
period of intensive internationalization of transportation
industries. The rise of U.S. industrial power in the 19th and
20th centuries also far outstripped European efforts. And systems, communications, commerce, science, and many
Japan too joined the Industrial Revolution with striking other human activities that unfolded between the middle
success. of the 19th century and the collapse of second phase
globalization that resulted from the outbreak of war in
The eastern European countries were behind early August of 1914. During the second half of the 19th
in the 20th century. It was not until the five-year plans that century, the Western world experienced a dramatic
the Soviet Union became a major industrial power, intensification of international connectivity due to four
telescoping into a few decades the industrialization that had advancing technologies–trains, steamships, the
taken a century and a half in Britain. The mid-20th century
telegraph, and the postal system. These developments
witnessed the spread of the Industrial Revolution into
transformed people’s expectations of what was possible
hitherto nonindustrialized areas such as China and India.
in much the same way that today’s electronic
The Second Industrial Revolution communications have shaped our own expectations of
what the 21st century has to offer us.
Despite considerable overlapping with the “old,”
there was mounting evidence for a “new” Industrial As early as the 1830s, the arrival of a letter from
Revolution in the late 19th and 20th centuries. In terms of far away could inspire a sense of wonder in the recipient.
basic materials, modern industry began to exploit many By the 1860s, transatlantic telegraphy provoked utopian
natural and synthetic resources not hitherto utilized: lighter and sometimes hysterical expressions of joy in the
metals, new alloys, and synthetic products such as plastics, expectation that instant communications would put an
as well as new energy sources. Combined with these were end to the scourge of war.
developments in machines, tools, and computers that gave
rise to the automatic factory. Although some segments of The period 1880 to 1914 saw a level of global
industry were almost completely mechanized in the early to economic integration that matched or even exceeded
mid-19th century, automatic operation, as distinct from the that of the global economy today. The investment capital
assembly line, first achieved major significance in the second that flowed around the world, much of it originating in
half of the 20th century. London, contributed to the economic development of the
former colonies of the global British Empire–the United
Ownership of the means of production also
States, Canada, Australia, and New Zealand. Small and
underwent changes. The oligarchical ownership of the
remote British possessions around the world, such as the
means of production that characterized the Industrial
Revolution in the early to mid-19th century gave way to a Cayman Islands, the Bahamas, and Hong Kong, would
wider distribution of ownership through purchase of eventually turn into so-called offshore tax havens, serving
common stocks by individuals and by institutions such as a global economic elite. Many of these subordinate micro
insurance companies. In the first half of the 20th century, states remain under British control to this day.
many countries of Europe socialized basic sectors of their
Other European colonial empires established
economies. There was also during that period a change in
their own international trade routes with their colonies in
political theories: instead of the laissez-faire ideas that
dominated the economic and social thought of the classical Africa, whose liberation’s would not come until the last
Industrial Revolution, governments generally moved into decades of the 20th century. In fact, the oppression and
the social and economic realm to meet the needs of their exploitation of colonized populations have always been
more complex industrial societies. an integral part of the global system. Raw materials and
more exotic goods flowed from the colonies across the
seas to Europe.
At the turn of the 20th century, an affluent Phase 3: The Modern Age of Globalization
inhabitant of London had access to many products of
The third phase of globalization that began in 1945
foreign origin years before the fateful events of August
was made possible by the long economic expansion that
1914 profoundly disrupted this world of unprecedented
followed the end of the Second World War. New global
global connectivity. The second half of the 19th century
economic reforms agreed upon by the United States and its
also saw an extraordinary proliferation of transnational
wartime allies in 1944 provided a new framework for
organizations, many of which aimed at improving the international commerce and finance.
world in one way or another by promulgating
humanitarian ideals or a belief in the value of knowledge The period from the late 1940s to the early 1970s
to human affairs. We may call these organizations and has been called the Golden Age of Capitalism, this new
their global campaigns or movements the idealistic global economic order, aimed at preventing a return of the
internationalisms. catastrophic economic conditions that had brought on the
Great Depression of the 1930s. The political implications of
The Swiss businessman and social activist Henri this new global economic order were and remain profound.
Dunant founded the Red Cross in 1863. The Salvation This international arrangement called for close cooperation
Army, a Christian international charitable organization, between nation-states, as opposed to the destructive
established in 1865. And the world’s only surviving economic competitions between nations of the 1930s. New
language movement of this era, Esperanto, appeared in international financial agreements and institutions, such as
1887.Surrounded by Poland’s language barriers and the International Monetary Fund and the World Bank,
ethnic conflicts, Ludwig Zamenhof invented the artificial provided a new kind of global financial stability. states were
language known as Esperanto in the hope of making empowered to set their own economic policies, including
setting levels of taxation that were very high by today’s
peace among the warring factions. The French nobleman
standards. States had the power to tightly regulate capital
Pierre de Coubertin, an admirer of the British sport
flows across national borders, thereby limiting the
system, founded the International Olympic Committee in
potentially destructive influence of foreign speculative
1894 with the goal of establishing better international
relations among the competing nations.
Far more than is the case today, politicians were
It is worth noting that all of these second phase able to maintain a significant degree of control over the
international organizations, with the partial exception of banking sector.Today, by contrast, the banking sector has
Esperanto, have enjoyed enormously successful global demonstrated that it has the power to challenge the
careers over the past century or more. They were and economic authority of nation-states to an unprecedented
they remain today exemplars of second phase degree. Finally, this new global economic arrangement
globalization. made possible the expansion of the welfare state and the
protections it provides to the economically vulnerable as
Having demonstrated their usefulness, or at least
well as to more financially secure citizens who may face
their widespread appeal to the global community, these illness or unemployment. The expansion of the welfare state
global organizations testify to the enduring stature of has been made possible by government regulation that
venerable movements that have always claimed to created a balance of power between governments, large
represent the highest aspirations of mankind. Perhaps corporations, and the financial sector. This strategic balance
some of these humanitarian activists realized at the time allowed governments to create social arrangements, such as
that without the practical internationalism of the the advanced welfare state.
Universal Postal Union, established in 1874, as well as the
services of the trans-Atlantic steamship companies, their The Golden Age of Capitalism ended during the
early 1970s. It has been succeeded by slower growth and a
idealistic projects would have faced insuperable
series of global financial crises related to the triumph of
neoliberal market globalism.This political and economic
arrangement is based upon a deregulation of the corporate
sector, the privatization of public enterprises and
institutions, tax reductions for businesses and individuals,
the setting of limits on the powers of labor unions, reducing The first era of globalization was born of empire and
the role of government in the formulation of social policies, industry in the late 19th century. With cheaper
and deregulating capital flows in the new global investment transportation and mass production, goods no longer had to
markets. These developments have coincided with the be made near to where they were consumed. Aided by
flourishing of unregulated offshore financial institutions and these advances, the British Empire effectively became one
shell company strategies, some of them legal, others illegal, massive free trade zone. The United States eventually
they have facilitated massive tax evasion by therich and inherited that globalized, battle-scarred world soon after the
embezzlement from the poor. These financial schemes Second World War and began to engineer what would
retard social development in developed and undeveloped become the second stage of globalization.
countries alike by removing trillions of dollars from the
societies that need them to promote social development. If the first stage of globalization was marked by
empire, the second one came out of a new international
Post-war globalization after 1945 has also produced order backed by the United States. New forms of
a global political dimension apart from the political forces communication allowed for production to be moved even
that have promoted neo-liberal policies. The founding in farther away from market. Commerce could be conducted
1945 of the United Nations, the successor to the League of with a greater speed too than ever before. We have seen in
Nations that had failed during the 1930s, marked a renewal this era globalization the rise of transnational supply chains,
of the idealistic internationalism that flourished prior to the the information revolution, and institutions such as the
first World War. The United Nations embodies hopes for World Trade Organization.
effective global governance and regulations that remain
largely unfulfilled. A third era of globalization is slowly coming into
view some twelve years into the new century. It seems to
The emergence during the postwar period of many involve the rise of regional powers throughout the world,
Non-Governmental Organizations, or NGOs, has been a commensurate with rapid growth in their respective
response to the limitations of international institutions, such economies (think of China, Nigeria, Brazil, Indonesia, and
as the United Nations. NGOs also respond to the fact that others). It is a healthier, wealthier, more interconnected
many nation-states are unwilling or unable to formulate or world built on a foundation of high technology. As with any
carry out a variety of important humanitarian and sort of global change, there will be disruption and confusion.
environmental projects. To help us identify what exactly the second stage of
globalization may be morphing into, McKinsey has identified
For this reason, the globalization of our own era five key trends:
includes NGOs, such as Human Rights Watch, Amnesty
International, Transparency International, and Greenpeace,  The "great rebalancing" toward what Jim O'Neill of
among many others. NGOs are modern examples of Goldman Sachs calls the "growth markets." The
idealistic internationalism, and their missions mind us that result will be a greater middle class and relentless
today’s globalization can be defined to include global innovation in products and markets.
responsibilities to poor and vulnerable people as well as to  The need for even greater economic productivity in
the endangered planet we all inhabit. developed markets, which in turn will drive the bulk
of their innovation.
If the 20th century was marked by the first and
 The global inter-connectivity of "capital, goods,
second stages of globalization, a number of trends are
information, and people" is fostering new ideas and
developing in the 21st century that point to what may be a
ways of doing business, while also driving greater
new era for our world's economy. We at NCF think that
these trends are worth highlighting, for this "new
 A greater focus on matching demand for the world's
globalization" will have a tremendous impact on the
critical resources with their supply.
American business community if true. I will start with a
 Rising pressure on free market-oriented
quick explanation of the globalizing forces that brought us
governments due to societal and demographic
today's economy and then highlight a recent report by
changes, coupled with the rise of state-driven
McKinsey & Co. that serves as a useful summary of the key
capitalism in the emerging markets.
trends informing this new globalization.