Development of the World Economy and Core-Periphery

Characteristics of Capitalism• Markets

– Consist of buyers and sellers of commodities (goods and services bought and sold for a price)

– PROFIT is incentive for selling goods and services

• Class relations – Capitalist class system based on money and earned status (not

tradition and born rank)– As merchants gained wealth in the 15th century, they also gained

political power• Aristocracy (hereditary) resisted

– Labor itself became a commodity, gave some power to workers

Characteristics of Capitalism• Finance

– Money became standardized, and ubiquitous as a measure of value

– Organization and control of money became an industry in its own right (banking, investment, insurance, commercial credit)

• Territorial and Geographic Changes – Capitalism creates uneven spatial development– Capitalism and colonialism are closely linked, and

created a system with Europe at the center and the colonies in the periphery

– As capitalism spread, urban areas became more developed, and more people moved to cities

Characteristics of Capitalism

• Long-Distance Trade – Buying and selling goods and services over long

distances is a key element of capitalism– Long-distance trade links producers and

consumers in capitalism– In 16th – 18th centuries, Europe built many roads,

canals (and later railroads) to facilitate trade• Accelerated time-space compression (takes less time

to get someplace)

– Led to development of comparative advantage • Comparative advantage stresses relative advantage

of one place over others; e.g., countries export the goods they can produce at the lowest relative cost

Characteristics of Capitalism• New Ideologies

– Capitalism is a set of economic, political, geographic relations simultaneously

– Printing press (1450) helped new ideas circulate more freely

• Shift from God-centered view to human-centered• Protestant reformation (emphasized role of individual,

stressed delayed gratification, savings, and material success as a sign of God’s grace, elevating work to a moral obligation, paving the way for capital accumulation)

• Science (16th century) restructured view of the world• Enlightenment emphasized science and secular

political thought

Characteristics of Capitalism• The Nation-State

– Rise of Nation-State• Nation: group of people who share a common culture,

language, history, territory, identity• State: Land, people, government, transportation, and

communication system; economic system; sovereignty, recognition

• Nation-State: where political and national boundaries coincide

– Capitalism came long before the rise of the nation-state

• Not necessarily a causal relationship

The Industrial Revolution

• Introduction – Industrial Revolution occurred long after

capitalism began– Industrialization includes transformations in

inputs, outputs, and technologies

• Inanimate Energy – Industrialization may be defined as the

harnessing of inanimate sources of energy• Running water, wood, coal, petroleum, and natural

gas (fossil fuels); each had spatial outcomes

The Industrial Revolution, continued• Technological Innovation

– Innovation helped reduce costs and increase revenues• Technology: means of converting inputs to outputs

– Development of the factory system• Began with textile industry• Increased capital (machines), interchangeable parts, many

workers under one roof

• Productivity Increases – Productivity: level of output generated by a given

volume of inputs– Cost to produce goods declined, consumption of

material goods increased– Industrialization of agriculture made food progressively

cheaper; people ate more and better food

The Industrial Revolution, continued• Geography of the Industrial Revolution

Fig. 2.17: Spread of the Industrial Revolution across the European Continent. Well after Britain had industrialized, the new form of manufacturing led to the formation of industrial complexes in France, then later in Germany and Italy.

Global Diffusion of Industrial Revolution

• Fig. 2.18: Global diffusion of the Industrial Revolution. Began in England, then spread to continental Europe; then to North America and Japan (1870s); reached Russia 1920s

The Industrial Revolution, continued

Creation of an Industrial Working Class• Creation of a working class through labor

unions• Urbanization: cities as centers of capital and

labor

Fig. 2. 21: An urbanization curve expresses the proportion of a country’s population that lives in cities. Urbanization rose with industrialization.

Growth of Global Markets and International Trade

• Transportation faster and cheaper; imports and exports increased; international finance grew; early industrializers had little competition

Colonialism: Capitalism on a World Scale

• “Age of Exploration” -- colonialism was economic, political, cultural

• Colonized nations fought rule by foreign colonizers – Inca against Spain; Zulu against Dutch Boers; Indian Sepoys against

British (1857); Boxer Rebellion in China against British (1899-1901)– Only Japan escaped colonization

• Europe became a world power through colonization

Colonialism: Capitalism on a World Scale, cont’d

• Effects of Colonialism– Annihilation of indigenous peoples– Restructuring around primary economic sector– Formation of dual society

• Co-optation of native elites (often ethnic minorities) exacerbated rivalries (e.g., Hutu and Tutsi in Rwanda)

– Polarized geographies• Colonial port cities became dominant• Transport networks met needs of colonizers, not indigenous peoples

– Transplantation of the nation-state• Colonial powers created states (Iraq, Afghanistan, etc.) with no respect for

indigenous cultures

– Cultural Westernization• Beginning of homogenization of local cultures, including missionary

conversions

Fig. 2.33: Railroads in Nigeria, Burma, and Angola show colonial Transportation networks that link coastal port cities with interior resources (usually mines or plantations)

Colonialism: Capitalism on a World Scale, cont’d

Colonialism: Capitalism on a World Scale, cont’d

• The End of Colonialism– Latin America gained independence early (after

Napoleonic Wars)– Africa and Asia gained independence after World Wars I

and II• Communist governments sometimes took control• Intellectuals educated in the West played a role in

some places (Kwame Nkrumah in Ghana; Ho Chi Min in Vietnam; Mohandas Gandhi in India)

• Some independence movements were violent (Vietnam, Algeria); others were peaceful (India)

• Today, there are few colonies