Memo Question for April 2: Imperialism, Colonialism, Globalization

Memo Question for April 2: Imperialism, Colonialism, Globalization: If the 1870-1914 period was a time of imperialism and colonialism, how could it also be an era of globaliztion? Your answer should be clear abou the definitions of these terms...

Comments

[Wayne Feng]

For the purposes of this memo imperialism/colonialism will be defined as the expansion of empires in a political and economic context. For the period of 1870-1914 this would mean countries such as Britain. For the purposes of this memo globalization will be defined as convergence between countries (in terms of wages). Chaswick and Hatton point out the effects of migration on the economy. They offer explanations for the different mass migrations that have occurred over history and there is convincing evidence that wages certainly drive immigration and policy is changed to encourage discourage immigration to maintain wage rates. Williamson argues that there is a clear link between convergence and trade. He provides evidence of convergence prior to 1914 and de-convergence which occurred after 1914. For Williamson it is not technology transfer, schooling, etc. which causes convergence, but rather trade as well as immigration/emigration. Bordo and Rockoff look at the implications of the Gold Standard in the ability of developing countries to borrow from European financiers. By linking the findings of these articles, we see that globalization can occur in the context of imperialism if there is some freedom allowed in the relationship between the countries involved. Imperialism occurred with European countries in relation to both tropical and temperate countries (Lewis). In this framework, OECD countries which either followed the rules of financing (such as the Gold Standard) and/or were colonial powers were able to start convergence due to increased trade and/or immigration between the countries. While there may have been restrictions on immigration or reaction to lowering wages, to expand the labor force and develop investments in colonies, the need to hire labor allowed immigration to reach high levels. Furthermore, trade created price convergence between countries, although Williamson contends that this accounted for a minority potion of convergence between trading countries. But this factor still did make a difference in those countries where barriers to trade did reduce the convergence that did occur. While globalization (convergence) did occur during the period of imperialism/colonization, the question remains as to why convergence reversed and why modern economic convergence does not occur at a faster rate/at all. Lewis would argue many things such as increasing food productivity and having better systems of borrowing for developing countries. There is also the question of whether or not beta-convergence is sufficient for sigma-convergence. Short term shocks may negatively impact the growth of a country and even with policies that may seem beneficial to a country, may actual lead the country to be open to shocks occurring and stunting growth (such as countries losing the ability to react to supply shocks under the Gold Standard system).

[Tijl Vanneste]

In the given period, the best example of an imperial (colonial) power perhaps at its height would be Great Britain. Imperialism (or colonialism) could be defined as a political as well as an economic force, with the incentive of benefiting the mother country by a system of exploitation, based on an effective political control and a colonial administration, that would also be imposing a tax revenue system. In using a soft definition of globalization, as a force tying different regions of the world closer together, an imperial drive could easily be linked to a parallel upward tendency of globalization, since it would (at least superficially) tie large areas together, as could be clearly seen in the case of the British empire. As Lewis pointed out, political forces such as imperialism could actively work against globalization, in limiting migration or foreign investments. Jeffrey Williamson defined globalization as a convergence in living standards. This would be more in line with the hard definition of globalization, price convergence. Williamson argues in his article that there was living standard convergence in the late nineteenth century, excluding third world countries (the colonial factor as explanation comes quickly to mind). He linked this to trade and migration, and it was Arthur Lewis who argued that such forces are more restricted today then they were in the past, for instance when he considered international borrowing policies or political impediments to migration. The difference between the late nineteenth century and today considering migration is also pointed out by Chiswick and Hatton, and this factor might be one of the most important issues for the future. The financial side of globalization has been described excellently by Lewis, in terms of money borrowing and its consequences. Bordo and Rockoff also deal with this aspect, although their article is too narrow in geographic focus to be really able to read it in global terms. India would have been a very interesting example, since it stayed longer on the silver standard, it was the crown jewel in the British empire, and it was historically different from countries that used to be colonies as well, such as Argentina or Australia. One historical explanation for the difference between former colonies that became first-world countries and those that became third-world countries is given by Alfred Crosby, pointing out differences in agricultural production between the ‘New Europe’ (for instance Argentina, the south of Brazil, New Zealand) and other countries, although not Asia. His research could be taken further. Lack of geographical scope is a more general problem. It is one thing to think of convergence and globalization within Europe, or within the ‘West’, or Eurasia, because such regions would already be defined on certain terms, historically, economically or politically, making it easier to recognize a converging pattern. Not questioning the validity of the reached conclusion, but globalization might not be the proper term to label such convergence.
In considering international money flows and investments, theories of globalization could be linked to imperialism, especially at a time when London was the main money lender. Cain and Hopkins have labeled the nineteenth century as “the invisible empire of finance” (Cain and Hopkins, “Gentlemanly Capitalism and British Expansion Overseas II: New Imperialism, 1850-1945”, in: The Economic History Review, Vol. 40, No. 1 (Feb., 1987), pp. 1-26). It seems that, not only researching financial policies in different time periods or in different areas but also in researching these flows in more detail, and the incentives behind it, imperialism and colonialism could be linked to globalization and also industrialization.

[Mitchell Hoffman]

I will define globalization as the global integration of markets. As markets become integrated, expected prices should equalize, and trade between different parts of the world should increase, with regions producing where they have comparative advantages.

Imperialism might be defined as the expansion of empire, where an empire is a connection of political territories held together without regard to national self-determination. Colonialism refers to the process of establishing colonies, or population units, in areas outside of where one enjoys legitimate political power.

According to my definitions, there is nothing inherently mutually exclusive about globalization and imperialism or colonialism. I view imperialism and colonialism as primarily political phenomena, particularly imperialism, whereas globalization is an economic phenomenon.

Williamson demonstrates that the period from 1870 to 1914 was indeed a period of globalization. As integration of markets should lead to some equalization of economic activity (in terms of growth, this is called convergence), he focuses on the evidence of convergence. The variation in output the small sample of countries Williamson focuses on decreases during the period in question, and convergence is even faster conditional on schooling. On the prices side, Williamson also documents convergences; prices were 60% higher in Liverpool than Chicago in 1870, but the difference decreased to 15% by 1912. The causes of globalization in this period were likely improved transportation (particularly steam ships) and moderate political stability between the great powers (at least less so than before 1870 or after 1914). That these great powers were also exploiting the developing world via imperialism and colonialism does not mean that greater integration could not have occurred among themselves, or for that matter, among the countries that they were exploiting.

Focusing specifically on the integration of labor markets, Chiswick and Hatton demonstrate that international migration spiked in the late 19th century. Some of it was driven by famine (e.g. the Irish potato famine) and revolution (e.g. the political conflict and wars surrounding the political unification of Germany), and they also emphasize the steam engine. The same steam ships that could easily transport troops back and forth to developing countries to quell rebellions could also be used for carrying immigrants, vastly increasing immigration, as Chiswick and Hatton discuss, not only to the United States, but also Europe to South America, and from Eastern Europe to Western Europe.

The other articles are less directly related to the question at hand. Bordo and Rockoff argue that using the gold standard allowed countries to get lower interest rates on international loans, perhaps evidence of the importance of creditworthiness and stability in international markets, which is evidence of financial integration, also possible despite colonialism and imperialism. The Lewis piece is concerned mostly with explaining several facts, the international economic order, as opposed to specifically addressing globalization in 1870-1914.

[Lemin Wu]

Why couldn’t it be? As far as I understand it, there’s no such “if…how-could-it-be-also…” relationship between colonialism and globalization. While imperialism can be in many forms and sometimes did impede globalization or overseas communication with outside world, colonialism in essence is exactly a process of globalization of a combination of factors ranging from labor, commodities and capital to technology, institutions and know-how. Considering the deep relationship between imperialism and colonialism in the period of interest, the globalizing process between 1870 and 1914 is characterized with imperialism and colonialism, different from the patter after WWII, when the newly independent countries resisted the immigration but the growing volume of international trade redefined the pattern of globalization.

I’d like to define globalization as the process of growing interaction across different regions in a global sense in production and consumption. The movement of capital, labor and commodities across borders grows with globalization. The expectation of such globalization effect and its impact on people’s life also add to the meaning of globalization. With the spontaneous market economy dominant and the level of marketableness assumed constant, the convergence of the prices of factors and products are taken as one of the most significant signs of globalization. The authors of the assigned reading mainly followed this idea to document the evolution of globalization.

Colonialism involved large-scale emigration from home country to the colonized areas. In a sense, it went little beyond a globalization of labor market and capital market. If anything deserving the cursed title of colonialism, it should be the fact that the immigrants dominated the political and economic life of the colonized areas. They also organized even bigger immigration of slave labor from other areas such as Africa and Asia besides the enhanced international trade of commodities.
The globalization documented in the researchers’ work slowed at the onset of WWI. This is supported by the decreased migration and increased variation of real wages across countries as evidence. Such statement of course depends on how we define globalization (what if we count war as an item in the list of globalization?). The concession of market economy to wartime allocation rule and the later policy during the depression should also partly explain the divergence of factor prices.

[Edson R Severnini]

Although the 1870-1914 was an era of colonialism and imperialism, it is also an era of globalization. Here we define colonialism as a situation where a country establish either settler colonies or administrative dependencies on foreign territories, exploring their natural resources, labor and markets, and imposing cultural structures on the native population. It is a direct political, economic and cultural intervention. Imperialism, in turn, is a broader concept that includes also informal influence and/or control. And, finally, globalization is the flow of capital and labor across national frontiers in unprecedented volume, as Williamson (1996) defines. Hence, if the control exercised by some countries on another involves transfers of goods and/or movements of people across borders, it is not contradictory that imperialism and globalization occurs concomitantly.

Williamson argues that the late nineteenth century was a period was of rapid globalization: “capital and labor flowed across national frontiers in unprecedented quantities, and commodity trade boomed as transport costs declined sharply” (p.277). He presents evidence on the falling standard dispersion of the real wages to show a convergence in living standards within most of the OECD countries (the peak rate of this convergence between 1870 and 1890 was 1.2 percent per annum, and about 1 percent per annum over the 1870 to 1913 period as a whole), and argues that most of that convergence was due to the open economy forces of trade and mass migration. The trade was driven basically by the colonization process and by the spread of the industrial revolution, and the international migration was driven by the push factors in the origin countries and pull factors in the destination or decision-making framework where potential emigrants compare expected future streams of income at home and abroad. The referred author says that it was not until after the middle of the nineteenth century that mass migration can really be said to have taken hold. Indeed, in the first three decades after 1846 the numbers averaged around 300,000 per annum, doubling in the following two decades and exceeding a million per annum by the turn of the century. So, by the definition above, this represented a huge step towards the globalization.

Chiswick and Hatton (2003) make the point that the globalization in the labor market is qualitatively different from globalization of goods or asset markets. They argue that with international migration the factor of production (labor services) crosses national boundaries embodied in individuals, and consequently, trading in goods and services and capital flows are fundamentally different than trading in labor services (people). Although interesting, this qualification of the definition of globalization does not affect the conclusion that there was a period of concomitant imperialism and globalization. Indeed, they presents a lot of evidence of the mass migration during the late nineteenth century, reinforcing that statement.

[rion]

Imperialism and colonialism describes a policy in empire building.

Imperialist extends its power by direct territorial acquisitions or by establishing economic and political hegemony over other nations.

Colonialist extends its sovereignty abroad by settling colonies, often paired with slavery, which rule or displace the indigenous population.

These two terms are used interchangeably and there is no point to distinguish for our purpose. I use colonialism as a general term hereafter for its more descriptive naming. Both also describe supporting belief that the colonizer is superior to the indigenous, like racism or, more sophisticated, social Darwinism. This aspect is of great importance by itself, but not relevant here. Note that these terms also apply to ancient empires such as the Aztec as well.

In contrast, globalization is a very vague term hard to define. However, as we did in the past, I'll focus on economic aspect here. Economic globalization can be defined as emergence of a unified, global world market. By doing so, we have a good measure of this phenomenon, namely, price convergence.

Given these definitions, colonialism can coexist with globalization without an issue, or it might accelerate it. After all, colonialism is also a form of interaction between two countries otherwise separated. In this view, colonialism does promote the price convergence, when it reduces transaction/transportation cost between two areas or it helps knowledge to diffuse oversea (thus makes it feasible to produce a good locally or at similar cost). Establishment of administrative branch and trade companies come under the former, while migration under the latter.

Williamson's argument is on this line: he attributed the high growth and associated convergence of living standards in the era to open economy and mass migration. Chiswick and Hatton is also supporting this by pointing out 'globalization in the labor market', by which they meant international migration, is different from that of goods and assets. Migration effectively transfers knowledge and production factor, whether it is caused by colonization, by political flight as in the case of Nazi Germany, or by voluntary immigration to the U.S. now.

The article by Bordo and Rockoff is less related to our question, but it provides the evidence how important the world financial market was already at that stage. Colonialism is less to do with financial market, but it did not suppress it either as far as I know.

[Insook Lee]

Based on articles, for this specific era 1870-1914 roughly two important feature rises, 1) unprecedented rise of migration, - “mass migration” -for instance, from northwest Europe to Europe, 1850-1919, exceeding one million per annum by the turn of century and 2) rise of the First World that stemmed from the convergence within the group of countries, which is called OECD nowadays, such as Western Europe and America. In understanding this dynamic period, not only globalization but also imperialism and colonialism are needed.
Globalization, even though any of authors does not provide explicitly the definition of this, they use this term for the integration of a national economy into the international one through trade, investment or migration that are key factor of production. Usually, it is conceived a sort of apolitical, or at least politically neutral description, unlike imperialism or colonialism. And the direction of influence might be mutual rather than unilateral, implicitly assuming that each economy has its own control for the resource allocation. In this respect, roughly, economic globalization at the two different scope occurred in this era. One is across the world, and the other is within a group of countries.
For the former, Arthur Lewis(1978) tries to display how the global economy evolves, especially giving a specific weight to the weather a country has. How the terms of trade that looks adverse, or at least unfavorable, to the LDC was established lies not only on the political reason, which is colonialism, but also economic one, which is explained in terms of comparative advantage. Moreover, by pointing out that blooming industrial revolution requires prior or simultaneous agricultural revolution, he explain how “agricultural countries” did not industrialize and evolved themselves as the net food supplier in the international trade. In this way, the world wide division was formulated in this era, and as a result, influencing ensuing period such as 1929 Great depression which left few economies in the world uninfluenced through price and other real parts.
At the same time when world wide expansion of economic interaction, there was another globalization which brought about a convergence within the countries that still lead the world economy, shrinking the difference in the living standards. Relying on CGE(computational general equilibrium model) and factor price convergence theorem, Jeffry G. Williamson(1996) estimated how this small sub-layer of globalization influenced the economies within the group. He argues that “commodity price convergence accounts for about three-tenths of real wage convergence between the United States and Britain during the 25 years after 1870, and about a tenth of the convergence between the United States and Sweden over the four decades after 1870” Trade, movement of goods, as a triggering engine of the convergence, migration, movement of labor factor amplified the convergence and integrity to the international economies within the group. Not to mention, startling example of migration impact on Irish economy, between 1870 to 1910, the US labor force was projected 13% smaller if there had not been the net immigration, and furthermore “perhaps one-half of the GDP per capita convergence was due to mass migration.”
Therefore, not only in the scope of the across Pacific, but also across the Atlantic oceans, the economic integrity increased; and therefore, this era could be titled for ‘globalization’. For the latter case, if I could coin a term, they themselves might establish small globe between them through economic interaction, keeping independent and autonomous political control.
In line with this, the increase of economic influence within this small globe was also supported by the article of Michael D. Bordo and Hugh Rockoff(1996). They argued they the adherence on the gold standard facilitated to international investment market and returns economic favors in the trade, since it can work as signal of sound fiscal and monetary policy. And this commitment mechanism originated from the era 1880, which they described as ‘Golden age’. Even though at that time this golden rule was regarded with escape clauses, it certainly provided “a nominal anchor to the international monetary system” and, as they verified with empirical research, its adherence did impact on the economy of countries.
Amongst this vibrantly increasing cross of capital and labor, across Atlantic or within Europe migration was not only source of the lines of workers transcending national borders. There also was antoher huge flow of migration from Asia or what is so called, Third World to the First World. What would be difference with the migration within the First World?
As Lewis(1978) and other authors pointed out that another pillar which operated the international economic order, was colonialism and imperialism, which gave offshoots that have last much longer terms. They entailed some political control over the colony, but at the same time dominating the resources of the colony and utilizing labor at very low price. This point was dealt with by Chiswick and Hatton(2003). They argued that this flow from Asia was “colonial inspired”, which was usually in the form of indentured servitude, and this was combined with plantation agriculture and mining at the place. Meeting the rise of demand in the First World, colonialism also had economic implications. This influx provided competitor for the native workers, not only served as good source of cheap labor factor. In pure economic point of view, therefore, it can also be one aspect of globalization, since somehow the economy influences each other, making a “global economy”. In broader point of view globalization and colonialism are entangled each other in complicated way, and each has its own right in penetrating and explaining the economy of 1870-1914.

[Alexandre Poirier]

The period from 1870 to 1914 was undoubtedly a period of imperialism and colonialism by the major European powers, such as Britain and France. These countries controlled many colonies on every continent, and fought many wars to preserve their worldwide "empire". Let us define globalization by an increased volume of international trade, and convergence of income across countries. According to this definition, this period saw an increased period of globalization. Williamson(1996) analyzes the disparity of real wage across countries, and its convergence rate, and finds that the peak rate of real wage convergence occurred between 1870 and 1890. He offers two main explanations for this convergence: this first one is factor price convergence. According to Hecksher and Ohlin, an increase in trade, caused by a decrease in transport costs, will tend increase the demand for the cheap factor and most poor countries, which is labor. Therefore, an increase in trade will cause higher wage growth in poorer countries than richer countries, causing convergence. The second explanation is mass migration: he computes CGE estimates for countries that saw mass exodus, or a large influx of immigrants, and finds that the wages in emigrating countries would have been lower, and those in receiving countries would have been higher. This was not independent of colonialism, as a very large fraction of new arrivals to the new world countries were African slaves.

On the other hand, a lot of migration occurred between countries like the US and Ireland, Argentina and Spain: countries that did not have colonial relationships at the time. This immigration is driven by many factors, including the wage ratio between the two countries and the population growth in the home country (Chiswick and Hatton). This is what happened to Ireland, where a massive increase in population, and very low wages during the famine caused mass emigration, and also helped the Irish real wages stay up. Williamson has shown that a large influx of immigrants decreases the real wage of the home population, therefore reducing wage disparity.

Also, regarding the trade aspect of globalization, industrialization in many European countries and North America created a choice for peripheral countries: imitate these countries, or trade with them (Lewis). Since the industrialized countries produced a greater and greater national product, they had more income to direct to importations, hence stimulating international trade. The peripheral countries mostly chose to keep trading instead of imitating, because of low agricultural productivity, which is necessary to make the transition to an industrial economy. Finally, Bordo and Rockoff show that most rich countries that adhered to the gold standard during the period did so to earn a good reputation among the other countries, making international transactions easier. Trade between countries on the gold standard was greatly facilitated, because their exchange rate was fixed. Overall, globalization and colonialism seem to have prospered during the same period, most of the time with no obvious connection.

[Gabriel Chodorow-Reich]

I will define globalization as the removal of barriers which prevent price convergence, whether of factors or final goods, across countries. Thus reductions in transportation costs, termination of import quotas, and lessening of immigration restrictions are all examples of pro-globalization forces. Volumes per se cannot reveal anything about globalization with this definition; in a world of identical countries, there is no need for cross-border flows even if there are no impediments to them. The crucial aspect is whether cross-border flows will emerge to reduce cross-border price differentials.

The Williamson and Chiswick and Hatton readings provide clear evidence for viewing the 1870-1914 period as one of globalization. Wage differentials, and primarily high wages in the new world relative to the old, caused massive amounts of immigration. Using a computable general equilibrium model, Williamson reports that the labor flows significantly narrowed the wage gap at the end of the period relative to what it otherwise would have been. Moreover, capital mobility during this period kept the marginal productivity of capital in the labor-receiving countries from rising too much relative to Europe, thus creating a second channel for factor price equalization.

Did this era of globalization proceed despite the colonial and imperial conditions in place? Chiswick and Hatton argue that these conditions enhanced the pace of globalization, through the transfer of skilled workers from the colonizers to their colonies and through the facilitated movement of workers among less developed regions. If the sterling-gold standard can be seen as a form of financial imperialism with Britain at the center, then Bordo and Rockoff provide additional evidence that the unified gold standard system enhanced financial globalization by creating a signaling mechanism whereby countries could indicate their credit-worthiness by adhering to the gold-standard system.

Yet, Lewis leaves us with a puzzle that suggests a central inadequacy of the definition of globalization offered above. On his account, the primary constraint keeping poor countries from becoming rich is poor agricultural productivity, particularly in the production of basic foodstuffs. Low agricultural productivity both pins down wage growth in other sectors and impedes urbanization, leaving poor countries stuck in a commodity producing, low-income equilibrium.

The obvious solution to the Lewis problem is to give poor countries the technology to increase agricultural productivity. Indeed, “green” revolutions have played a large role in beginning the industrialization process in a number of countries. But gricultural technology is also non-rival – nothing should prevent it from diffusing rapidly across the globe. That is, how could food-producing technology lag so far in the developing world?

Perhaps globalization, then, should also encompass technology transfer. After all, modern growth theory tells us that it is the mixing of factors (TFP), and not the abundance of factors themselves, that has the largest effect on incomes.

[Willa]

Defining globalization specifically as an integration of markets represented by a convergence in prices (of goods, capital, and labor) allows one to not anticipate that imperialism and colonialism would be associated with increased globalization. Imperialism and colonialism defined - again more specifically – as extractive, one-sided, force-determined interactions between countries/regions might be expected to maintain colonies markets distinct from those of the colonizer in order that the colonizer can reap the most benefits. An imperialist would not allow a convergence in prices between the home country and the colony because the benefit of the home country is of primary interest. Lewis points out that the US cotton suppliers benefited from racial discrimination, demonstrating a specific example of how colonialism and imperialism would be expected to contribute to unequal terms of trade between colonizing and non-colonizing countries.

Yet, what is observed between 1870 and 1914 is an era of both unbalanced power relationships through military strength between countries and convergence of prices – or an era of colonialism and imperialism along side of globalization.

Colonialism and imperialism allowed for a greater level of mobility as colonizers facilitated the travel of colonial subjects between different parts of their empire – notably from India to Africa and the Caribbean. Specifically Chiswick notes that more than a million Indians were sent by the British to other parts of the Empire (7), and lists many other “colonial inspired” Asian migrations. These contributed to globalization but were supported by the colonizing and imperialism also present. Additionally the decrease in transportation costs perhaps spurred by interest in empire creation facilitated other voluntary migrations.

Williamson argues that a huge portion of the convergence observed during this time was due to mass migration (294). However he is referring primarily to mass migration within the OECD and recognizes that convergence was weak outside of this small group (279). Here migration from the poorer parts of Europe to the richer parts and to the United States can account for a good deal of convergence he observes.

Chiswick discusses this same migration from Europe as an equalizing force between countries – the labor in the receiver country was hurt by a huge influx of workers willing to work for low wages and thereby lowering wages and increasing unemployment, while the opposite occurred in the countries that were net senders of immigrants.

Chiswick later discusses the motives for these convergence-inducing migrations and among them are many factors that can be seen as resulting from the imperialism and colonialism of the day. Lowered transportation costs and changing opportunities to make money abroad, trade with other countries that may have hurt job security within some countries, especially for agricultural workers, all added to the changing economic incentives for migrants.