If we want to understand economic globalization, it is interesting to look at the development of worldwide capitalism. Capitalism is an economic system, started in the second part of the 15th century, with the ‘conquest of the New World. Trade with America and Asia gave the first boost to capitalism. But it was only in the second half of the 18th century that capitalism really started to develop. With the Industrial Revolution in England, mass manufactoring came into existence. In the 19th century, the first resulting factories appeared.

At the end of the 19th century, companies were organized in a country. Because the number of companies grew, first competition between them arose. If they want to survive in the mass market, companies have to make profit. They can do this by reducing the wage of the labourers by dismissing labourers and giving the same work to a smaller workforce or by simply replacing the workforce by machines. The result being that the buying capacity of the working class decreases, which means that ultimately the companies cannot sell their products anymore. A lot of little companies have to close, and only the big ones will survive.

This process results in an economic crisis. At the end of the 19th century, crises regularly occurred. Big companies therefore where looking for a solution. A first possibility was to join forces: big companies had to work together if they wanted to survive. A second possibility was to expand their market: by setting up branch offices abroad, and by colonizing the Southern underdeveloped countries. At the end of the 19th century, the whole world was divided between American and European states, in order to make the profits of their national companies grow. The suppressed colonies also delivered cheap rough materials. The fact that Germany did not obtain a lot of colonies - which frustrates the German companies - is one of the reasons why the First World War broke out.

A few years after World War I, a new worldwide crisis errupted. More companies had to close. nemployment rates and worldwide poverty increased. Fascism seized power and World War II broke out.

At the end of World War II, the world had changed dramatically. Europe was completely destroyed, but Russia was becoming a strong state. In 1917, a socialist revolution had gained power and because of the communist resistance during World War II, sympathy for Russian communism was rising. That is why American companies became afraid and why the US set up the Marshall Plan. By financing the development of Europe, the US hoped to block off the ‘communist danger' and to create a market for American commodities. The same happened with Japan. To enlarge the US-control and to strength the Cold War against communist Russia, America started building up military bases around the world (Israel is only one example). After World War II, American companies also started to give more power to their branch offices. The first multinationals were born.

At the end of the sixties, the American dollar was that widely dispersed, that its value started to decrease. As a direct answer, OPEC (oil-producing Arab countries) decided to increase the world oil price. Worldwide oil-contracts were made in dollars, and OPEC was afraid to lose money. This resulted in the early seventies in a new worldwide crisis. Companies again had to close or unite. Unemployment increased again and a new problem arose. Japan and Europe had grown strong with a new competition as a result. There now was a competition between the companies of the American, West-European and East-Asian block.

Capitalism again had to find a solution and the neo-liberal policy gained interest. This policy model of savings was founded by Ronald Reagan (US) at the end of the seventies, and Margaret Thatcher (UK) in the early eighties. A second opportunity came with the fall of the Berlin Wall, in 1989. With the fall of communism and the liberalization of the Eastern block, capitalism found a new way out. The former communist countries were the dreamt-of market for the big western companies. With the opening of the Eastern block, where labour rights were completely destroyed, every big company also started to deallocate: shutting down factories in the home country in order to start production - at lower costs - in the South or the Eastern block.
The results of this process only seem to make things worse: the situation in the Eastern block has dramatically deteriorated since the fall of the Berlin Wall. (Vandepitte:2001)

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Vandepitte, M. (2001) Dit Europa willen wij niet. d14/Indymedia