Thomas Sebastian Globalization

Books on Globalization tend to fall in two broad categories a) academic which are concentrate on economic theories and are difficult to read and understand, b) for popular consumption which dwell on the efficacy or otherwise of globalization, the impact it has on various classes and promote an agenda but have little substance.
This is obviously an over simplification.
Thomas Sebastian's book brings a refreshing change. It is is easy to read, had a lot of information and analysis. It also discusses the deleterious effect of globalization on the working class and how the gap between haves and have nots is widening not only between developed and under developed countries, but also between the rich and poor in both societies.
The author highlights the salient points of his inquiry in the introductory chapter of the book:
Globalization is a continuation of capitalist development, uneven development is a historical creation, capitalism is 400 years old and uneven development is inherent in the law of motion of capitalism.
World has always been uneven and that gave birth to mercantilism which in time led to capital accumulation and capitalism. But the qualitative difference between the two systems is that in the first one the differential space was due to activities of nature where as the second one owes it to conscious activities of man.
History is the evolution of material reality in time, while geography is evolution in space. His inquiry is directed to understanding uneven development using the methods of historical-geographical materialism as enunciated by Marx and his followers especially Henry Lefebvre and David Harvey.
Mercantilism engineered a division of labor based on natural differences. Under capitalism the UK, other European countries, the USA and Japan intensified and extended the division of labor they inherited. the division higher levels during the period of colonialism and for reasons of greater efficiency was replaced by a new system of neocolonial space. Multinational corporations (MNCs) are the most evolved practitioners of neocolonialism.
Capitalism has also created uneven spaces with in neocolonies for the latter to serve as a market for its products.
In addition to dividing the space globally capitalism also divides the minds of the people. For this purpose it has invented the religion of consumerism. Control over media helps it achieve global cultural uniformity.
Operation of the capital is through Foreign direct Investment (FDI) through MNCs. and contends that FDI has not helped the masses or underdeveloped areas. It has concentrated wealth in a few hands. Sky scrapers and over passes look down upon slums. this process started during the period of colonialism has continued and further intensified during globalization.
The level of exploitation of the people is akin to barbarism.Transformation of society into socialism is historically possible and necessary.
Value is based on socially necessary labor time. For value to rise exchange is necessary. For the latter differentiation is a prerequisite.Under capitalist exchange the mechanism is so controlled that differentiation is not only maintained but also intensified and expanded. Differentiation is accentuated by transfer of value from India(and other underdeveloped counties) to developed countries through FDI.

GIVEN WISDOM

The ear list reference to capitalist structure ad uneven development are in works of J.H. von Thunen. he delves in location of farm activity with reference to the city.
Karl Marx speaks of division of labor between the town and country as the foundation of capitalist development and extends it to the whole world. He contends that effect of machinery is to increase the supply of raw material as cotton gin augmented the production of cotton. Cheap articles and improved transport furnish the weapons for conquering foreign markets by ruining handicraft production. modern industry gives spur to emigration and colonization of foreign lands eg Australia. International division of labor converts one part of globe into an agricultural field and the other part remains industrial field.

SCHOOLS OF THOUGHT

Three schools have attempted to theorize an explanation of uneven development. 1 Neoclassical, 2 dependency and 3 Marxist

-Neoclassicists views are similar to those of Adam Smith the founder of political economy that as market developed there would be efficient division of labor and more over all development. W.W.Rostow enunciated a universal theory of five stages;
-traditional society
-precondition for development
-take off
-maturity
-mass consumption.
Among the neoclassicists technocrats believe in perfect information and free movement of capital and labor that will lead to trickle down benefit to all. Institutionalists would like state intervention to overcome uneven development. They contend that nature's bounties which will decide the location of industries.
Sixties and seventies saw the advent of neotechnology school. Its massage was that the countries which innovate and diversify would have an edge and developing countries can produce only simple products.
All above theories propose a doctrine of free trade. they are however undermined by government intervention in favor of certain industries which is protectionism. Neoclassicists have developed a strategic trade theory for targeted policy interventions to optimize national interests. Interventions can be entry barrier, tariff and non-tariff protection and differential interest rates. It is based on retaliation and aggression.
Acquired comparative advantage is the result of initiative at industry level induced advantage is due to state intervention.
Stephen Hymer (1972)contends that MNCs have three tiered setup. Knowledge based activities stay in home country, while actual production goes to cheap labor rural areas of the host country and regional management is located in major cities of the host country.Vernon (1978) postulates that firms innovate by exploiting economies available from redesigning the product as assembly products whose components are transportable at low cost. Developed countries produce exportable components , developing countries assemble them at low cost.
Castells (1997) contends that knowledge itself has become the major product traded internationally now.
Neoclassicists regard capitalist society as a given, eternal and universal.According they reduce social reality to economic reality.

DEPENDENCY SCHOOL

In 1967 Frank published "Capitalism and Underdevelopment in Latin America" and dependency school came into existence.The development of underdevelopment occurs because the world capitalist system ostracized by metropolis-satellite structure. Metropolis exploits the satellite and and surplus is concentrated in metropolis. Satellite is reduced to a state of dependence.
Wallerstein divides capitalist system into 1 core, 2 semi-periphery and periphery. The essential differences is in the strenght of the state power. which operates to alter the terms of trade so that surplus continues to pour into the core.
Monopoly capital is administered three tiers. Head office is in a major world center, regional offices in large world cities and production in cheap labor areas with easy access to raw material and transport. Intermediate levels are just agents and the real relationship of exploitation is level of wage.
Rey and Arrighi hold that since preconditions of for capitalist production did not arise naturally in most parts of the world, they were imposed by external force.Resources were opened up by displacing the existing ruling class and reorganize indigenous societies by direct military coercion. Rey called it the colonial mode of production.
Once the frame work had been transformed to fit the needs of capital it could be left alone and domination assured by economic means and a political base in the area. and formal decolonization became possible.Capitalist mode of production was hampered by existence of pre-existing mode of production. This was circumvented by reaching the stage of finance capital and Capitol acquired the power to impose capitalistic mode of production from out side.
Samir Amin holds that core countries developed capitalism earlier and even when wages rose at the center the led ensured lower costs.
Capitalist development in the periphery was blocked and the latter could compete only in resource based exports. Large arts of population were excluded so that pre-capitalist mode of production was not entirely eliminated.. Amin calls it peripheral capitalism.
Once the system is established it is manged by the enter by 1 technological monopoly, 2 financial control, 3access to resources, media monopoly,4 and WMDs.
Hymer disagrees. He sees the new administration structure at three levels a) top managers who decide goals, plans and stay in finance centers, and b) middle managers who mange supervise subsidiaries and field managers and c)day to day managers who are located in cheap labor areas with access to raw material and markets. Expansion of MNCs into periphery does not improve the welfare of population, only brings more profits to to the center.
According to Harry Magdoff dependency is a way for continuation of the benefits of former colonies.using IMF, WB, UN and by military dominance.
The process of value transfer works by paying petty producers less than wage.
The coexistence of capitalist, petty commodity and subsistence mode of prediction causes stagnation in the last two.
The dependency schools fail to recognize significance of autonomous third world histories and the resistance to colonialism.
Dependency theorists are unable to explain the qualitative changes. the qualitative essence of capitalism is expansion of surplus value through increase of relative surplus labor.
Dependency theory asserts that underdevelopment was a result of unequal exchange relations and the conclusion that severance of the relations would bring about domestic accumulation and self reliant development.
Dependency theories were adopted precisely because they could not provide framework to transition to socialism.

MARXIST SCHOOL

Henry Lefebvre defines three levels od reproduction,1 biological, 2 labor power ie working class and3 social relations of production. To the last is the capitalist organization predominantly related. In the urbanized space of advanced capitalism are the dominant relations of production are produced. Space is created parcelled and organized into locations of control.and extended to global scale through state bureaucracy.Survival of capitalism depends upon juxtaposition of overdeveloped and underdeveloped regions. Capitalism can break down only when capitalist social relations can not be reproduced.
Mandel holds that unequal development between regions and nations is the essence of capitalism. If in order to survive all working people got jobs where they lived there would be no reserves free for sudden expansion of industrial capitalism. When not produced naturally they are produced by force. During the freely competitive capitalism up to the end of nineteenth century super profits were derived from juxtaposition of industry and agriculture in the advanced countries.Capitalism did not suddenly internationalize. Mercantile capital had been operating for centuries to extract profit through commodity trade. Imperialism internationalized finance, money and investment transactions.
According to Harvey uneven development is the result of capitalist effort to solve its internal contradictions of over production and devaluation of of goods. the state intervenes by extending credit and capitalist forces extend the market beyond national boundaries.leading to over accumulation at global level. As solution to this hierarchy of spaces is created with imperialist countries at the top and underdeveloped ones at the bottom.
Neil Smith speaks of seesaw movement of capital, when profits dry up in one region capital moves elsewhere and moves back to the first place after squeezing the second one and will survive as long as it can work the back and forth movement.
Bannerjee-Guha states that in India operations of MNCs are associated with unevenness, inequality and distorted growth. At the level of production capital intensive technology and foreign control, at cultural level conspicous consumersm and at the fundamental level of development creation of regional inequality, export industries and extreme urban-rural-class divides.
Class analysis locates the force of history in class struggle and allocates a strong influence to people on their destiny. Class analysis is basic to understanding of underdevelopment. It is necessary to focus on the role of domestic bourgeoisie. class formation, class alliances and role of the state.

In their creative activities Human beings confront materials of nature and transform them to meet their needs and aims.
Humans are conditioned not only by nature, but also by what they make of it. Concept of nature as a complex of natural and social conditions of production and human intervention is very significant. The path of production and consumption humans adopt determines every aspect of their existence.
Initially all the regions of the world were more or less identical and people developed in isolation. Developments were dictated by geography and differed from each other. Benefits were enjoyed more or less equally by all the people. They are referred to as primitive communities.
With advancement of human society primitive societies were dismantled and differentiated into towns and villages. The villages existed for towns. This was differential space, was hierarchical in nature and eventually expanded into imperialist countries and colonies. The latest division into imperialist countries and neocolonies is the widest and deepest division so far. This is global hierarchy of space.
It is essential to analyze the factors which gave rise to global hierarchy. A person becomes a capitalist if he uses his money to expand. A person may be a) money capitalist, b) production capitalist or c) merchant capitalist.
The money capitalist advances money to production capitalist who produces things which merchant capitalist undertakes to sell. Surplus value is created and profit is shared along the chain. A person combining all the three functions is industrial capitalist.
The motivation is accumulation of wealth and that is inherent in capitalist production. The motor driving capitalism is accumulation and production for their own sake. Capital gets concentrated in fewer and fewer hands. For capital to circulate and wealth to accumulate there are certain minimal requirements of credit institutions, lawmakers and enforcement of laws, issue and maintenance of money, and physical infrastructure of roads, railways, factories, storage, power stations, ports, ships and waste dumps. A nation state provides the above cost effectively. Capitalism inherited absolute space from city states and under pressure of productive forces combined into city states. Nation state served the purpose of maintaining capitalist control over politics of the area and to provide a captive market in times of crisis.
With further enhancement of productive forces capitalists faced a dilemma. They needed a state but to continue expansion would have to break the boundaries. Colonial system was established by Europeans in the 19th century and later by the USA and Japan as a solution to the problem. Imperialist forces took it on themselves to build the social and physical infrastructure for accumulation of capital of the imperialist states. It was an nonviable system as imperialist states vied with each other for colonies and fought two world wars. the problem of Increasing opposition from colonies was solved by creating much more efficient relative spaces of necklines which though different in form is a continuation of the old system. The task of the neocolonial system is to maintain the differentiated and hierarchical system of states necessary for capital accumulation.
Production of space involves all that exists in that space. Underdevelopment of a particular space is produced/reproduced as a part of accumulation of capital now evolved into the global neocolonial system.
Globalization is nothing but a post modern expression of the historical process of capitalist expansion. Appropriate approach to the study has to be historical-geographical materialism which is application of dialectical materialism to the study.

THE INTERNAL DYNAMICS OF CAPITAL AND SPACE

Capitalism is commodity production. Any product for sale in the market possessing use value, exchange value and value is commodity. Use value is e.g. cloth for wearing. Value comes from concrete labor which goes into production. It depends on productivity of labor and will differ from firm to firm. Exchange value refers to the amount of commodity needed to buy another commodity and is determined by socially necessary labor time. The common factor in all products is labor which constitutes value. Values are comparable.
Concede labor creates use value. The labor time expended by commodity producers is called individual labor time. time required to produce use value under existing conditions of production is socially necessary labor time .
Value is conceived as a social average taken over all locations and integrated into a network of exchange and can change with a change in networked area, thus spatial integration is central to the concept of value and the law of value plays a central role in capitalism.
Under capitalism labor is commodity. Value of labor power is the value of the means of livelihood to keep the worker alive and his offspring growing as future workers. Labor power is special in that it can create higher value. The difference between value and higher value is surplus value. The process is augmentation of value which is the ultimate motivation of capitalism. Law of surplus is the basic economic law of capitalism.
The part of capital used to buy means of production is called constant capital. Part of capital used to buy labor power is called variable capital. Surplus value is value augmentation by variable capital.
Labor time needed for sustenance of a worker is necessary labor time, that used to produce surplus is surplus labor time.
Capitalists resort to lengthen labor time and surplus value arising from it is called absolute surplus value. Capitalist can not lengthen labor time beyond a limit and incur labor opposition so they shorten the necessary labor time and lengthen relative surplus labor time by introducing new technology thus creating relative surplus value.
The reason a capitalists introduce technology is to reduce individual labor time in below socially necessary labor time. He sells his commodity at the value determined by the latter time and gets more profits than other capitalists do, but others adopt new technology soon and product value comes down, but general labor productivity will have been elevated and necessary labor time will be shortened leading to ever more profit.
The activity of continuous capital accumulation requires continuous increase in the scale of production, the bigger capitalist has greater advantage, he can buy larger equipment and new technology. Smaller capitalists will be swallowed up, thus competition becomes an external force to necessitate more and more accumulation.
Capital is value in motion. In the first phase of this motion, capitalist buys means of production and labor force, thus transforming money capital into production capital and prepares to create. surplus value. In the second phase means of production are combined with labor force. Production capital now takes the form of commodity capital which contains surplus value created by labor. This product is taken to the market for the final phase of motion. Industrial capital passes through all the three phases and is involved in a circular flow.
Now the capitalist has more money and goes to buy more. This circulation is called turnover and the time taken for one cycle is turn over time. To reduce turn over time the capitalist lengthens labor time, labor intensity and improves production methods. In the exchange phase better transportation and communications and organization is developed.
To achieve spatial integration, in addition to exchange barriers to movement of commodity and money have to be reduced to a minimum. The important thing is not the distance but the speed with which the market can be reached.
Production of commodities is tied to a particular location for the duration of labor process. Advantage of a location depends upon cost of production, transportation, interest rate. Cost varies with natural resources, social, political and economic conditions which affect the value of labor power, intermediate out put and demand. Relative locational advantage translates into more profit akin to that arising from better technology. Concept of abstract space arises when there are exchanges between large number of differentiated spaces. Production in areas where space is cheaper than the social average leads to more profit.
Capitalists who sell at social average but produce at local costs which are less enjoy this type of surplus value. This is different from the permanent form of fall in the value of labor power when value of commodities falls. If rent rises capitalist would want to shift his production activity. Barriers to this shift are full turnover of fixed capital and the need to create new infra structure. Harvey (1999) holds that the factors of technology, organization may lead to agglomeration of activities in large urban centers. Movability of labor is also a factor and capitalists demand removal of all barriers to this mobility. In order to push down the exchange value of labor power capital needs an army of unemployed, but to take advantage of that mobility of labor has to be curtailed and it should not be allowed to go back to the land. This is one of the internal contradictions of capital.
Another contradiction is that reduction of socially necessary time requires concentration of production and consumption to reduce turnover time, but this leads to increasing costs, rigidity in use of infra structure, rising rent and lack of space. this calls for dispersal which has its own constraints .This tension forces simultaneous or successive deepening and widening of its spatial configurations leading to antagonism between the center and the periphery.

CRISIS OF ACCUMULATION AND TRANSMISSION OF CRISES.

Crisis is one of accumulation due to overproduction which is rooted in the contradiction between the social nature of production and private ownership manifested in great increase of productive forces while purchasing power of working class decreases. Along with expansion of production consumption level should rise too, but the capitalist tries to reduce wages to the lowest possible. New techniques enhance the number of unemployed. Peasants and handicraft men are bankrupted. Economic crises of over production become inevitable. All enterprises are disconnected, individual capitalist do not know the actual demand and production is chaotic. The problem is solved by the banking and credit system to step in and transfer money from those who have a lot. or the government may step in as advocated by Maynard Keynes (The general Theory) after the crash of 1930. Creating demand at government initiative to compensate fro lack of demand in the capitalist system is called Keynesian. The forms it had taken are welfare type in Europe. military one in the USA and development activities in less developed countries. The huge money supply by the state creates the impression of sustainable demand. Every increase in production leads to more concentration in the hands of a few. The short fall in demand becomes in time more severe. State and banks work hard to create more money to increase demand leading to inflation which is devaluation of money. There will be sectoral imbalances as well between production and demand. Prices will rise.
One solution is to open up borders and export commodities and that needs international money. Gold was inherited from the mercantilist system. Infra structure of banks, communication and transport is needed which were created in the colonial period through the export of capital. The export is at the cost of devaluation of the assets and labor of importing country. Producers in the importing country lose out in the competition. Exporting countries have exported their problems, not solved it.
Stocks of unsold goods pile up, machinery gets rusted and devalued, workers lose jobs. and wages are pushed down.
People of the importing countries may oppose the devaluation of their economies. With political control exports can be forced on colonies, but that market would get exhausted. If capital is not used for expansion it will get devalued. Export of capital does not replace export of commodities, though capital by increasing the purchasing power of a few people may increase demand.
Export of capital takes the form of loans, technical partnership. The most important from is foreign direct investment (FDI) Returns are greater, the untapped resources of the host countries can be tapped and it can enter the local market. FDI needs infra structure for its function of expansion, so it concentrates in the areas where it is available. These areas flourish and surrounding areas are devalued which become a source of cheap labor. creating in them the willingness to ever lower wages. and reinforce the culture of TINA-there is no alternative.
Crisis over accumulation is converted into crises of switching of capital from one region to another.
In its four hundred years history capitalism has evolved through various guises and is going through a transition from export f commodities to export of capital to globalized chain of production. Export of capital creates spaces whose objective is to aid accumulation in metropolitan centers. Development should be complementary hence it seeks subordinated spaces. This space was created by conquest in mercantilist phase in some parts of the world and in the whole world in the imperialist phase. Hierarchical space of colonialism has been reproduced. through the machinations of imperialist countries and multinational corporations(MNCs). The latter play the central role in globalization.
According to Lefebvre capitalism inherited absolute space-that of the church and the nave, of the castle and the palace, as a result of unity of political, economic and religious-cultural space. Capitalism has created separate for these separate forces in the society and has reserved abstract space for itself as an artist has the concept of abstract space in his mind and allocates different spaces for activities, such as furniture fro sitting, entrance, passages, toilets. In the context of a city, the class orientation of the planner will be reflected in whether he emphasizes fly-overs or low cost housing.
Information revolution has provided enormous collection of data about natural and human resources and can help plans for efficient utilization of resources. Only the imperialist countries have the capacity to plan and they leave details to MNCs, and their decisions re location, outsourcing are based on greater relative surplus value(profit).
Cost of production is related to skills, standard of living, , constant flow of labor power and human development index (HDI) developed by UNO is a good indicator of all the above. Low HDI is a crucial condition for MNCs to extract surplus value.
As a general rule any one who has control over abstract space has control over concrete space as money has control over commodities. International capital is able to maintain control with the help of comprador capital of neocolonies where backward areas exist for cities and cities exist for imperial centers. IMF, WB and WTO backed by military power have been established for enforcement of the activities of MNCs.


PHASES OF UNEVEN DEVELOPMENT.

Feudal society was driven by maintenance of hierarchy and its privileges; accumulation was a bye-product. Situation changed during two hundred years of mercantilism; it was a period of transition between feudal and capitalist mode of production.
In primitive accumulation under mercantilism surplus was extracted during exchange. The merchant gathered a large number of craftsmen into a factory and introduced division of labor. Slowly the capitalist reorganized production to increase absolute and relative surplus values and to extract them in the production process by reducing necessary labor time.
Capitalists do two things to accumulate 1) increase relative surplus value by improving technology and 2) reduce turn over time by improvements in transport and communications. Now parts of a product like for example a car can be produced in 50 places and surplus is generated in all 50. Globalization has been able to shift production into under developed countries, Workers in developed countries are pacified with social security and pensions.
Outsourcing appears to have similarities with mercantilist system, but the differences are:
Under handicraft system technological knowledge was free, workers worked at their own rhythm, creation of technology was in the work shop. Under globalization technology is the most important product and activity of developed countries. modern small scale producer enjoys no autonomy.
Intermediate producers over accumulate too, and fire their workers easily as the latter are often casual employees. Thus outsourcing partially solves an inherent contradiction; that of inability to find markets. Wealth gets concentrated in a few hands in centers which produce knowledge while the workers who produced the surplus value live in poverty with misery of an uncertain future.
Globalization is in the logic of capital. It did not suddenly break out. Capitalism has to keep on expanding to survive. It is also a search for an internal solution, for surplus value, reduce turn over time and to reduce organized resistance to exploitation. In a sense it is a sign of dynamism of capitalist system.
Success of globalization depends to a great degree on cooperation of the ruling elite of the neocolonies to suppress development of revolutionary class consciousness. by spreading religious fanaticism and racial/caste and religious divisions by compromising with feudal forces (and its subsidiaries, the clerics and the military) and most importantly by promoting the new religion of consumerism.

TRANSITION FROM FEUDALISM TO CAPITALISM

Feudalism arose and thrived as it could develop productive forces better than its predecessor slavery which collapsed due to its inability to do so. By giving land to slaves productivity could be increased. Feudal lords also organized colonization and introduced technology like water mills. Monks were the only literate group and spread technology. Feudal lords were wasteful consumers and continual war fare took a great toll, only 4-5% revenue went into investment. Over a thousand years the system was dynamic enough to allow recovery from collapse of the Roman empire and enabled the West to out strip China and Islamic Empire. Feudalism is the hegemony of small scale individual production plus the forced seigniorial levy. Trade, wage laborers, primitive accumulation and sequestration of peasants from land caused its decline and the rise of capitalism. The transition started in 14th century.

TRANSITION FROM LABOR RENT TO RENT IN KIND TO MONEY RENT

Feudal society faced Malthusian crisis of food shortage which occurred once every century. Feudalism had occupied all cultivable land and could expand no further. Crises in 14th and 15th centuries loosened feudal ties.

to underwrite their conspicuous consumption the lords needed more and more revenue and discovered that collecting rent in kind was more productive as peasants rook more interest in production than the serfs did as the former could keep a part of produce. The producer has become a little independent and the next stage was rent in money. The traditional common law relationship between the peasant and land owner is transformed into cash. and leads to either to expropriation or to peasant buying his land and liberty. This also anticipates the formation of property less laborers.

SEPARATION OF PEASANTRY FROM LAND AND EMERGENCE OF WAGE LABOR

Wage laborers are essential for capitalist relations to emerge and are produced when people are deprived of land and tools are taken away from artisans. The enclosure movement in England in 15th century and the laws passed in England and France by Kings during 16th and 17th centuries deprived people of their means of production and converted them into wage laborers. Laws were passed against beggary.
In England the first capitalist country coalition of landlords, capitalist farmers and the state fought a centuries long campaign to privatize farms and enclose commons traditionally used by peasant collectives. Peasants were evicted from their farms from 15th to 19th century.

TOWNS AND VILLAGES.

In the towns merchants could skim off a part of surplus and became a class. towns also offered handicraft as a new way of creating wealth Inventions like spinning wheel, lathe, printing, eye glass saved labor and enhanced productivity.
The logic of town was commodity and production was division of labor based. Serfs escaping oppression of lords provided the Work force . Workshop owners used the guild system to restrict production and competition. journey men suffered, fought guilds and tried to introduce free wage labor. This was proto-industrialization.

MERCANTILISM: BEGINNING OF UNEVEN DEVELOPMENT
Role of international trade in primitive accumulation.

International trade which may be defined as exchanges between communities with different social formations has been a fact of life since times unknown and through the process of primitive accumulation was the most important factor in the transition from feudalism to capitalism.
Pre-capitalist communities only wanted what they actually needed and except for a few luxury goods and spices produced them at home. Exchanges such as payment of dues and gifts were a part of social obligations and were effected through extra economic means. That they were aware of long distance trade is borne out by the discovery of China porcelain in Central Africa and ostrich feathers and spices in Europe.
In pre-capitalist exchanges the middleman made profits. People of the mid-East controlled the trade and European merchants had to offer gold as the more advanced and self sufficient economies of India and China did not need any thing Europeans could produce. Morocco produced gold which passed into mid-Eastern-Muslim hands.
Portuguese were the first people to go beyond the boundaries of Europe. that was to secure control of trans-Saharan gold routes and they captured Ceuta in 1415. they did not find gold but the venture gave them familiarity with the coast and the idea to outflank overland Arab trade network. Columbus in an effort to outwit them went west and ended up in the Caribbean in 1492 and Vasco de Gama in Kozhikode in 1498. Long voyages were common place among Asians, but were new to Europeans (hence discovery of Americas. In the eighties one American Indian went to Rome, waved a flag at the airport and claimed that he had discovered Italy).They went under the authority of the Pope with the authority of a Papal Bull to the King of Portugal to attack, conquer and subdue Saracens, pagans and other non-believers in Christ; to capture their goods and territories and reduce them to perpetual slavery..(compare that to the authority American congress gave to Bush)-Ziauddin 1993.
Aztecs in Mexico and Inca in Peru were overcome by Spain in early 16th century. Following Arab practice Africans were taken across the Atlantic as slaves to satisfy labor shortage.
The first demand for slaves came from Spaniards, but the Portuguese, the Dutch, the French and the British organized the trade; the last after gaining naval supremacy became the leading slaver.
Between 1451 and 1807 ten million slaves were taken across
Atlantic.
Following Vasco de Gama's arrival in 1498, the first trading post was established in Kozikode in India in 1500. By 1510 spices and other goods started flowing into Europe bypassing Arab traders and drying up Ottoman revenues from overland trade. By 1509 Portuguese had reached Malacca and Albuquerque captured Goa in 1511.
With bases in India the Portuguese with better ships captured coastal towns in Oman and Iran and extracted tributes from local rulers. Abbas 1 of Safavid dynasty sought the help of the Dutch and the Brush, and threw the Portuguese out only to fall under the control of the British-who defeated the Dutch-by the early 19th century.
Moluccas in Indonesia was the only source of cloves, nutmeg and mace. In 16th century it came under the control of Portuguese, fell under the sway of the Dutch in 17th century . ( my note- fixation of Europeans on spices is easy to explain. They did not have enough to eat in off season and with out refrigeration stored food rotted. spices helped suppress the smell of rotten flesh). They did not establish direct rule but controlled it completely. Once coffee became popular in Europe they forced Indonesians to grow it and paid little.
When sugar replaced coffee as the main export of Indonesia. By the end of 18th century cotton goods the erstwhile main export of Java had been eliminated.
Robert Clive defeated Nawab Sirajuddaula of Bengal in 1757 and started the subjugation of India. In the mercantilist phase between 1757 and 1813 when the monopoly was abolished the East India as the sole legal company as the sole legal monopolist was the vehicle of exploitation of India. 1813 t0 1834 was the transition, free trade phase of exploitation. The company traded in Cotton, agricultural goods, indigo and opium.
During 15 hundreds West Europeans took control over international trade and the following three centuries if mercantilist phase Capitol accumulation paved the way to industrial capitalism.
West European countries progressed into the capitalist mode, the rest of the world was pushed into miserable poverty. Africa for three centuries only supplied slaves.
American Indians had been killed in their millions. After Spain was weakened in Napoleonic wars, led by landlords and merchants and helped by the British they won independence by the first quarter of 19th century. The leaders shifted allegiance and the native industry and handicraft were destroyed by British manufactures.

COLONIALISM-INSTITUTION OF UNEVEN DEVELOPMENT.

During the industrial revolution capitalist countries matured and transformed themselves into imperialist powers. Adam Smith, David Ricardo, J.S. mills, J.B. Say and Thomas Malthus were the main theoreticians and their work gave rise to the market theory that left to itself world economy will grow.
Marx pointed out that market was not as liberating as classical economists would have it; actually it s only a cover over the exploitative social relations between the owners of the means of production and workers who created surplus value that led to accumulation and that the new relations of production was more exploitative than the one it had replaced.
Capitalist accumulation has two basic tendencies, namely concentration and centralization of capital which leads to monopoly which leads to reduction in costs of production and increase in profits. Once capitalism reaches monopoly stage rules of competition and accumulation change.
In the beginning of 20th century US monopoly organizations controlled 70% of metallurgical, 66% of Iron and steel, 81% of chemical, 80% of tobacco and sugar, 85% of aluminum and 95% of coal and oil production. Free competition capitalism was grew into monopoly capitalism and transformed itself into imperialism. Banks, joint stock companies and new technology among other factors played important roles in the transformation. Through a major joint stock company stocks of other joint stock companies are bought which in turn buy others. In this way a relatively small amount of capital can control a much larger capital.
Important features of imperialism are 1)domination of monopolistic organizations, 2) export of capital, 3) international division of labor, 4)international domination of finance capital. 5) division of the world among imperialist countries.(Lenin-Imperialism).
With emergence of monopoly, capital rather than commodity export dominated. This was to control sources of raw material.
Under imperialism the system of production is a few organized economic powers with a periphery of underdeveloped agrarian or semi-agrarian countries.
Suez canal in 1869, Panama canal in 1914, faster ships since 1840s, transatlantic cables in 1850s and mass production goods due to industrial revolution, military innovations like breach loading rifles all played a role in spread of imperialism.
In the economic field Gold and Silver standards had come into being by 1770s, by 1908 89% of the world lived under convertible currencies. Business and commercial codes were adapted from Napoleonic code, universal postal was established in 1878.
During 1830s and 1840s North Africa was colonized. Britain subjugated China after 1839-42 opium wars. India went down in 1757 and the process was completed in 1857.
Having won independence Latin America entered international trade as exporter of primary products in the 1840s.
Coinciding with transition of European economies from mercantilism to industrial capitalism and changing pattern of demand for raw materials, the first half of 19th century saw abolition of slave trade.
Late nineteenth and early twentieth century the British got involved in Egypt/Sudan, and made deals with Sheikhs of Gulf region. Aden was annexed in 1830. Britain went to war with Iran for right of passage to India in 1956. France took over Algeria in 1830, Spain invaded morocco in 1860, Tunisia came under French in 1881. Europeans carved up Africa at the Berlin conference of 1885.
During the mercantilist phase Europeans stopped at the coast. African states and merchants which carried on in the interior were destroyed by colonization.
East India company not only taxed India but also monopolized opium trade and production and between 1757 and 1822 5-6% of GDP was siphoned off (Bagchi 1982.) Previously an exporter India became an importer of British cotton as the British destroyed the indigenous industries of India by controlling production of raw material. Land revenue pattern along with deindustrialization created a semi-feudal society.
From mid nineteenth century colonists started building railways, irrigation works and ports. They also developed mines, tea plantations and jute industry.
Between 1850s and 1918 it was so worked out that India had deficit with Britain and surplus in trade with rest of the world which the former used to balance their deficit with USA and Europe (Bagchi 1982) .
Till 1880 mercantile trade Europeans exploited China. In imperialist stage they occupied parts of Chinese Empire.
Japan could resist colonial onslaught thanks to the Meiji enlightenment revolution o 1868 in which bourgeoisie and nobility joined hands, the former adapted factory system and that put the country on the way to capitalist industrialization. With the advent of industrial revolution in mid 19th century ship yards, arsenals and textile mills appeared in Japan. Government played a critical role by collecting taxes and putting it in private hands and reached the monopoly stage by early 20th century and started expanding, but had a small internal market and lacked raw materials. In 1872 they seized Luchu. In 1894 they captured Pescadores and Taiwan and separated Korea from China. In 1904 they fought a war with Russia, defeated them, established protectorate over Korea, control over Kwangtung province, Port Arthur and southern branch of Chinese railway. ( I am told that Japanese victory over Russia was celebrated in India as victory of non-whites over whites). In 1907 they made a deal with Russia over spheres of influence in Manchuria, in 1910 Korea was annexed and between 1902 and 1914 Japanese investment in China went up 220 fold.
during mercantilist phase Europeans settled in North America, Australia and New Zealand whose development followed the European pattern. Due to high productivity they attracted European capital and developed domestic markets and labor force and moved towards early industrialization and were regarded by Europeans as extensions of their own space and not as colonies.
The USA had a nucleus of industry by the time of independence. Textiles followed in 1820. A neutral stance in Napoleonic wars saved its merchant fleet; the East had industries,, the south produced exportable, and mid-west provided food. With monopoly competition changes from with in national boundaries to international competition in which weaker countries are absorbed by the stronger ones.
Countries with less developed finance capital (Britain and France) gave loans and purchased shares in foreign firms. In countries with more developed finance capital (Germany and USA they made direct investment in production (FDI)