Globalization: Are We Defeating War?

Globalization has resulted in new markets and fast growth in recent years. This has caused national borders to fade a bit in the wake of the flow of new money.

The geopolitical changes that have occurred during the last one hundred years have upset the major centers of power time and time again. Yet, two world wars and the icy spectre of nuclear winter have not cooled the rapid population growth of the world. Since 1900, the world's population has multiplied by more than four times: from 1.6 billion to 6.8 billion. At the beginning of the 20th century, Europe was the center of economic dominance, but it was quickly overtaken by the United States. Now, many point toward China as the next potential dominant world superpower. Such statements ignore the complicated chain of circumstances that have turned the economy into a massive web of interconnected resources and trading.

Just follow the money. For example, this chart shows foreign direct investment (FDI) as a percentage of gross world product (GWP). In 1970, it was a minute .07%, but it grew to a height of 3 percent in 2000 and has since cooled to about 1.6% due to a temporarily stuttering economy. This massive increase of investment undoubtedly helped to fuel the growth of the world's economy, as much of the investment was the operation of new businesses (and transfer of that expertise) to places where it had not existed previously. The cumulative effect of this was that GWP more than tripled in the past 35 years.

The East India Trading Company was one of the world's first corporations, and while it did a great deal of global trade, it did nothing for the idea of globalization. The company operated within the system of mercantilism, which was an economically parasitic system designed to benefit the mother country (usually European). Because the European continent was saturated with people, raw materials had become scarce and governments chartered organizations to go looking for more. An example is the shortage of trees for ships' masts in England, an emerging naval power in the 16th century. One thing the East India Trading Company did have in common with the modern corporation, however, was its inherently profit-seeking motive. Mercantilism is long dead, and multinational corporations spread their influence over multiple continents and in vastly different revenue streams in an effort to maximize productivity.

The recent globalization trend has been spurred in part by the massive increase in global communications (via the internet) which has allowed international corporations to realize a new form of profit. Many organizations now host their executive operations in a westernized country (the U.S., Europe, Japan, Singapore, and many others), and outsource their manufacturing operations to a nation with an abundance of cheap labor (China, India, Taiwan, Bangladesh, and anything else you see stamped on the bottom of a Happy Meal toy). It has become cheaper to outsource labor and assembly and ship the finished product. Labor laws within many western countries require higher wages and worker protections, and companies seeking to avoid that can outsource. Many have brought civil rights accusations against corporations for encouraging unsavory practices such as child labor, but the revenue keeps flowing. This page: with much of the information courtesy of the University of Michigan, posts news articles that describe some of the growing pains of globalization, including destroying the profitability of Guatemalan farmers with the introduction of international supermarkets.

What does globalization have to do with war? As the trail of money wraps around the world, it causes migrations, reverse migrations, travel, trade, and the spread of new ideas to many populations that have not been previously been integrated into the world economy. A perfect example is Dubai, which is located in the United Arab Emirates. Dubai has become one of the fastest-growing international cities in the world, and it boasts such attractions as indoor ski resorts and the world's only 7-star hotel: Burj Al Arab, an example of the massive flow of money in the region. Patrons can stay for the modest fee of 6,490 Dirham per night (currently this converts to just shy of 1800 USD/night). The greatest triumph, however, isn't the available temptation of economic decadence, but the fact that such a system has been created within one of the most socially static regions of the world. The Muslim religion practiced by a majority of the Middle East's inhabitants is not a negative, but it does make trade a bit difficult at times. For example, the month of Ramadan represents a time of fasting, and Muslims are not permitted to eat during the day. Restaurants found a way to continue to operate for Western business: they put shades down over the establishments.

Money melts borders. Certainly, people will always exist that seek to take by aggression what they have not been able to earn through fair business, but the nature of that aggression is changing. Nation against nation conflicts are yielding to terrorism and tribal warfare. Certainly, none among us can be so naive as to think that the concept of war will disappear, but its practice is undoubtedly changing. Conventional armies can take territory with great rapidity, but holding it requires an investment of resources that amounts to nation building. The net effect of the massive globalization trend is to shrink the distance between people into a question of dollars and cents (or yuan, if you prefer). Additionally, international actors such as the World Trade Organization seek to provide a playing field from which all nations can engage in trade in a reasonable manner. These means that lawmaking bodies are starting to cross borders, and legislative power is beginning to lose its concentration in the hands of individual countries. Watch for the gradual change of the current system as more players continue to engage the world's economy, and introduce new types of revenue streams and markets. The nation has not existed forever; perhaps a new system will replace it in time.



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