Globalization and the Limits of Definition

There are strong reasons for doubting the analytical validity of the term “globalization.” Indeed, one of the main features of the term is the wide diversity of its use in explaining a range of modern economic phenomena. There is no doubt that the term's midwife was in the period between 1973 and 1979, with the collapse of the Bretton Woods system and the two oil price shocks. This destroyed well-established price, supply and demand schedules and completely undermined political and economic policy processes which had been based upon them. Uncertainty and inflationary pressure became the main policy problems and finance and industry struggled to overcome this by seeking wider outlets for investment and goods. This, in its turn, resulted in higher bank lending abroad, culminating in the debt crisis, the growth of the Eurodollar market and an increase in the foreign trade to Gross Domestic Product (GDP) ratios of the advanced capitalist countries (ACCs). This was to some extent codified in policy terms by the widespread deregulation of financial markets, notably exchange controls, and implicitly, their increased internationalization in the late 1970s and 1980s. Concomitant with this was the observed increase in the de-industrialization of the ACCs, with growing long-term unemployment, and the rise of a number of newly industrializing countries in the Third World and their penetration of ACC markets. This last phenomenon provoked a debate on the role of standardized mass production — epitomised by the use of the term “post-Fordism” — wherein the large, nationally-centred oligopolistic corporation, operating as the principal economic agent, was challenged by flexible production systems operated by less tightly structured firms, usually multinational enterprises, but including smaller-scale companies, functioning in a world environment of hitherto unimagined complexity.

It is not the intention here, to analyse the “long boom” of 1945- 1973; suffice it so say that the period's recently acquired sobriquet as the “Golden Age” attests to its significance in modern economic history. A few points are, however, worth reiterating. The boom's dominant feature was the growth in production. Between 1950 and 1973, output in the advanced capitalist economies grew by 180 percent and the growth records in the second phase of the internationalization of the world economy easily eclipsed anything which had occurred previously, as table 1 illustrates.