The crucial change in world history came at the turn of the fifteenth and sixteenth centuries, the age of the Great Discovery. Since then, an increasing number of western European countries (first Spain and Portugal, then England, France, and Germany) have been guided by economic considerations. As Europeans established a monopoly on direct maritime communications with other continents, a system of world trade relations began to develop, gradually embracing the whole known world of the time. The dominant positions in this global trading system were taken by those who created it, namely the Europeans. They were the ones able to extract, from trade operations with Asian, African, and American countries, not just profits but super-profits due to the non-equivalent, i.e. unequal nature of this trade exchange. Thus, a phenomenon that had never existed before in human history – the global economic system (also known as “the global capitalist system” or simply “the modern world system”) – emerged.
From the point of view of the systemic approach, the end of the modern era represents nothing less than the first signs of the emergence and development of the world (global) economic system. The most important feature of the global economic system is that, firstly, it functions precisely as a market, i.e. as a system of trade exchange, and secondly – and this is particularly important – it does not relate to any external social systems. At the same time, local economic and social systems, while continuing to retain their subjectivity, are becoming increasingly open to external factors, rather than being self-sufficient. In other words, the global economic system is a system of economic entities whose development is less and less limited by geographical, political, and legislative frameworks, and unrestrained by political regulations of the state.
Globalization differs from the earlier periods in the formation and presence of a single economic space. As a result, one of the objective trends in the development of society is the general commercialization and digitalization of the entire world, including the commercialization, mechanization (industrialization), and unification of all areas of social life that were not involved in market relations in the past.
1.2 The emergence and development of globalization
The modern stage of economic globalization is characterized by the widespread commercialization and privatization of state monopolies (housing and utilities, energy, transport, the military-industrial complex, etc.), which are carried out according to the same template across the entire world. Commercialization and privatization have also affected other initially non-commercial areas and institutions of social life (education, science, medicine, culture). At the same time, even today, at the peak of corporate globalization and “privatization of the welfare state”, the objective tendency of expansion of capital and relations that are based on commodity and currency is not absolute and is always restrained by certain limits of a non-economic order.
These limits can be physical (space and resource limitations), political (state organizations and structures, borders, etc.), technological (transport, communications, etc.), the requirements of social stability (social stratification is simply the reverse side of the concentration of capital), security, and the long-term needs of modernization and infrastructure construction, which require long-term investment.
Therefore, economic globalization with its ultra-liberal economic model should not be seen as an irreversible process, as neoliberal thinkers typically do, but as a reversible and even cyclical shift in the balance of power and interests among various elites and other social groups.
The objectivity of economic laws does not mean that restrictions of a non-economic order must be abolished since it is the non-economic limitations of law that allow human societies to exist. The presence of a permanent tendency does not mean the abolition of forces opposed to it, either objective or subjective. For example, the objectivity of the law of universal gravitation affects evolution, but by no means does it impose a ban on terrestrial life forms that exist in the constant struggle with the force of gravity.
Liberalization and commercialization cause the degradation of vital – especially in the long term – non-commercial spheres of social life (science, culture, education, marriage, and family relations), which constitute an essential part of human existence.
Probably, the crises in the world economy and the domestic politics of individual states caused by liberalization, commercialization, and deregulation will in the future lead to the opposite movement, namely to a natural deliberalization and regionalization, and the reincarnation of such social institutions as nation states and nations.
At any rate, we have the example of Roosevelt’s New Deal, which replaced the decade of post-war liberalism of the 1920s. Moreover, there are many other examples of successful deliberalization and deprivatization, most notably the creation of the European model of the “welfare state”7 and the construction of a range of viable models of socialism and compromise social models based on several civilizations and cultures.
In the economy, there have been global changes linked with the emergence and growth of transnational corporations (TNCs) and globalized banking and financial structures.
Manufacturing has long ceased to be only national; it is increasingly transnational as individual countries are responsible only for certain stages of producing a product, which travels a long way from raw material to being ready for use through the production cycles of many countries. This is the type of production carried out by TNCs, but they do not focus on a single industry or product.
Thus, in the 1990s, the combined sales of the world’s 500 largest TNCs accounted for more than a quarter of global GDP, more than a third of global manufacturing exports, three-quarters of trade in goods, and four-fifths of trade in technology. At the same time, about 40 per cent of world trade happened in the trade flows within TNCs8.
However, these same figures show that, when taking into account national markets, including some sectors of the economy that are purely local yet quite large (housing and utilities and infrastructure) and the presence of a fairly significant natural economy, no more than 30 per cent of the economy is globalized. At the same time, its knowledge-intensive and technological part, which is not connected with the necessities, and the financial sector with its specifics are globalized.
The limited natural resources of the world have led to the formation of a vertical structure of the world system, divided into a “core” and a “periphery” both spatially and socially. This leads to the strengthening of the power of elites and desocialization of the “middle class”. Similarly, the unevenness of development increases in all spheres of life, both globally and locally. The growth of disparity, including social differentiation, is both the cause and the result of increased competition for all kinds of resources.
The global economic system consists of fundamentally unequal interacting components, which are the “core” and the “periphery”. The “core” of the global economic system consists of countries that benefit from economic interaction with other states (these are the so-called “developed countries”). The “periphery”, on the other hand, consists of states that lose out in economic cooperation with countries that are part of the “core” economic system. These components finally took shape in the twentieth century.
Over the past two centuries, the average per capita income of 20 per cent of the world’s population, i.e. for the inhabitants of the “core” or “golden billion” countries, has risen in real terms by a factor of about 50. At the same time, 80 per cent of the population saw it grow in the best case three to five times, and in some cases remain at the level of the Middle Ages or even decrease, compared with what it was before the emergence of the global economic system9.
In addition to the “core” and “periphery”, the system often distinguishes a third zone, the so-called “semi-periphery”, the most mobile element. Its presence is a kind of constant, while the position of an individual state in it is a variable conditioned by the acute and continuous competitive struggle.
However, the competition for a place in the vertical structure is happening within the “core” as well. It manifests itself in the confrontation of different countries and different groups of united elites of the Western world in a bid for influence on global economic and social processes. Also, the peripheral states struggle to enter the semi-periphery as they hope eventually to join the core of the global economic system. However, for the peripheral states, this struggle is largely unpromising, because the “core” has reached its possible limits of growth, which is determined by limited resources and the structural limits of the society.
Meanwhile, another way of including the social periphery of the world system in the “core” is gaining momentum today – migratory expansion (colonization) of the global periphery into the “golden billion” states, transferring the old contradiction between the “core” and the “periphery” into qualitatively new forms.
In its initial stage, the global economic system was built as a system of control over production and exchange. The fierce struggle in the “core” was a competitive struggle not for equal access to the world market but for control over it, i.e. for the division and redistribution of spheres of influence.
Initially, from the sixteenth to the eighteenth century, this was expressed in the struggle for ownership of maritime communications and the most advantageous coastal trading locations in the East and the New World, which were involved in an intensive exchange of goods with Europe. Then, beginning in the first quarter of the nineteenth century, when Europe underwent the “industrial revolution”, a fierce struggle began to promote cheap European goods in eastern markets. Finally, in the last third of the nineteenth century, the “core” countries fought for the final division of the world. In this case, it was not only about markets for finished products but also about the objects of capital exports, i.e. the objects of investment.
The state and its institutions remain the most important instruments in the struggle for world domination. The western European nation state, since the beginning of modern times (i.e. the era of the global economic system), has been manifesting the interests of commercial and entrepreneurial circles. It played a decisive role in the process of the peripheralization of the whole world and the creation of different levels of wages and levels of consumption corresponding to the three main zones.
Among the “core” countries of the global economic system, there is an Asian country, Japan, which began its “ascent” in the last third of the nineteenth century. This indicates that the relationship between the core and the periphery is not reduced to the “West-East” confrontation and the “clash of civilizations”. At the same time, the “liberation” of the countries of Asia, Africa, and Latin America from political colonial dependence did not result in any major changes in the global economic system.
Coercion by force was necessary to lower the status of the defeated state and to incorporate the victim of expansion into the global economic system as a source of raw materials, a market, and an object of investment. By the twenty-first century, when most peripheral countries were already functioning steadily as such, the need for coercion by force had diminished considerably along with the costs of these actions, though far from “gone”, as many believe. Direct military coercion, albeit in new forms that reduce the scale of permanent military presence in peripheral countries, has persisted and will continue for the foreseeable future, as the precedents of Iraq, Afghanistan, Serbia, Libya, Syria, etc. indicate.
As a result of actions to control markets, a colonial system emerged that existed from the sixteenth century until the middle of the twentieth century.
The financial and social costs of administering the dependent countries of this era, with their primitive material production, were very high. They often did not recoup the maintenance of colonial administrations and power structures. All this led to the disintegration (and, according to several reasonable opinions, to the dismantling from above) of Europe’s largest colonial empires and the transfer of former colonies to a neocolonial mode of exploitation after World War II. Notably, after the war, Great Britain, of its own volition, granted first partial autonomy and then nominal political independence to its colonies and protectorates. In doing so, it shifted the costs of administration and moral responsibility for the low standard of living of the population from the metropolis to the administrations of the new states.
Thus, the change from colonial to neocolonial dependence turned out to be not a “liberation” but a form of increasing the efficiency of the economies of the “core” countries of the world system. Social expenditures began to be borne by the newly independent states. Nevertheless, the former metropolises retained control over the financial and, in part, manufacturing sectors of the newly emerged political entities.
At the same time, the “decolonization” of countries of the world’s periphery, which took place in a historically short period from the end of World War II to the mid-60s, reduced political contradictions among countries of the capitalist “core” (which caused two world wars), giving financial, manufacturing, and trade entities relatively equal access to the markets of former colonies.
It is obvious that gaining nominal independence, i.e. changing the international legal status of a territory, does not in principle mean that it is capable of automatically changing its position in the global economic vertical. The existing global system of economic and political elites, increasingly independent of national governments, does not allow many countries to develop effectively. This allows those elites and those states that are in the “core” of the world system to maintain the efficiency of their own financial, manufacturing, and trade entities at the expense of the resources of the periphery.
It should be noted that systemic opposition plays an important role in the constant marginalization of the geopolitical periphery. It encompasses the so-called “anti-systemic movements”, i.e. mass protest social movements aimed at overcoming “backwardness” and raising the living standards of certain population groups in one way or another. These include various kinds of mass movements in the “core” countries, and communist and national-liberation political associations in the Third World (existing under a variety of slogans – from socialist and anti-globalist to national and religious fundamentalist).