Economic GlobalizationSocial Studies 10-1

Key Terms

• economic globalization

• reparations

• communism

• economic depression

• market economy

Economic Globalization

• is the increasing interconnectedness of people and places as a result of advances in transport, communication, and information technologies that cause political, economic, and cultural convergence.

William Tabb• Globalization is healthy but does not

benefit all people economically

Joseph Stiglitz

• Won the Nobel Prize for Economics in 2001• countries and peoples are more economically

integrated today than ever before. • Interdependence has happened because

communication and transportation costs have been greatly reduced and barriers to the flow of goods, services, capital, and knowledge have been taken down.

Naomi Klein

• Journalist• Economic globalization reaches into every

aspect of life, but she believes that it builds fences between people.

• “These fences of social exclusion candiscard an entire industry, and they can also write off an entire country.”

WWI

• Britain, France, and Russia against Germany and Austria-Hungary.

• The economic costs of the war were also high. European cities, towns, farms, roads, factories, ports, ships, and railways had been destroyed.

• Significant decrease in the production of goods

• Unemployment was to follow…….

Treaty of Versailles

• was supposed to ensure peace and prevent another global war.

• Reparation payments were too extreme and eventually lead to feelings of retribution by Germany

• John Maynard Keynes, a member of the British delegation, said that crippling Germany and Austria with war debts would starve the people and guarantee another major war.

The Big 4

Effects of WWI on Canada• $2.5 million a day• After the war, interest

payments on the country’s war debt totaled $164 million a year and soldiers’ pensions cost another $76 million a year

• This eventually lead to a period of high unemployment which was compounded by the great depression

Russian Revolution

• In 1914, Russia was ruled by Czar Nicholas II• Russian peasants lived difficult lives under an ancient economic

system that allowed them little control over their labour or propertyTHEY WANTED REVOLUTION SO….• Nicholas II was forced to give up his throne in 1917 and he and

his family were murdered in 1918• In 1922, the Union of Soviet Socialist Republics emerged out of

the former Russia. The USSR, or Soviet Union, was the world’s first communist stateunder Lenin

• an ideology would form that would shape the face of 20th century history comparing government control to economic freedom

Communism• a new economic and political model

that was supposed to get rid of class distinctions.

• Opposition to Capitalism• Under Stalin the Soviet Union became

a one party state (dictatorship)• This gave way to many restrictions and

oppressions on the Soviet people• Many historians believe that the people

of the Soviet Union were worse off under Stalin than under the czars.

The Great Depression• Tuesday, October 29, 1929

Black Tuesdaya decrease in stock value caused widespread panic and investors started selling stocks

Result – people who lost money could no longer pay bills

• Gradually, the entire world moved into an economic depression — the Great Depression.

Depression in Canada

• Between 1929 and 1933, Canadian exports fell by 50 per cent

• By 1933, 26.6 per cent of Canadians were out of work

• 1929. In addition, a drought that had started in 1928 continued off and on until 1937

WWII

• Germany hit hard by depression

• 1933 Adolf Hitler and the Nazi Party promised to fix things

• Hitler was popular, and he convinced many Germans that they belonged to a master race that was entitled to rule other people

The United Nations at Bretton Woods

• In July 1944, representatives of 44 countries met in the small New Hampshire town of Bretton Woods for a conference sponsored by the newly founded United Nations to prevent the economic turmoil that may lead to another war

Keynes

• Keynes believed that the unrestricted capitalism that had existed before World War I and between the two world wars had failed

• Keynes believed that the government needs to intervene at times in the economy to create economic stability

For ExampleGovernments should set up programs to hire the

unemployedInterventionist

Hayek

• Friedrich Hayek disagreed with Keynes’s views on the economic role of government

• According to Hayek, a government should protect the market by ensuring that its rules and laws do not interfere with competition between businesses

World Bank and the IMF

• Monetary Fund, or IMF, were mapped out at the Bretton Woods meetings. These two organizations would be supported by the United Nations and would help expand international trade

Why?To Avoid Another War!

Gatt (general agreement on tariffs and trade)• GATT members agreed to gradually

eliminate tariffs and other trade barriers between themselves

Basically

Trade Rules!!!

Changed Foundations

Capitalism vs Communism• Source of a great amount of

friction• This “Cold War” greatly

affected global trade• By 1989 the Soviet Union was

growing weak and these frictions gradually disappeared and a new economic age would emerge

Hayek and Friedman

The Market Economy• less government intervention and

freer markets would generate economic health and prosperity

Freidman’s theories Influenced Margaret Thatcher

• As a result, Britain and the U.S. began to move toward a market economy

The debate between the two differing economic visions continues to reverberate in the world today.

Journal Entry #9

• To what extent did world events shape contemporary economic globalization?