The third phase of globalization that began in 1945 was made possible by the long economic expansion that followed the end of the Second World War. New global economic reforms agreed upon by the United States and its wartime allies in 1944 provided a new framework for international commerce and finance. The period from the late 1940s to the early 1970s has been called the Golden Age of Capitalism, this new global economic order, aimed at preventing a return of the catastrophic economic conditions that had brought on the Great Depression of the 1930s.
The political implications of this new global economic order were and remain profound. This international arrangement called for close cooperation between nation-states, as opposed to the destructive economic competitions between nations of the 1930s. New international financial agreements and institutions, such as the International Monetary Fund and the World Bank, provided a new kind of global financial stability.
States were empowered to set their own economic policies, including setting levels of taxation that were very high by today’s standards. States had the power to tightly regulate capital flows across national borders, thereby limiting the potentially destructive influence of foreign speculative investors. Far more than is the case today, politicians were able to maintain a significant degree of control over the banking sector. Today, by contrast, the banking sector has demonstrated that it has the power to challenge the economic authority of nation-states to an unprecedented degree.
Finally, this new global economic arrangement made possible the expansion of the welfare state and the protections it provides to the economically vulnerable as well as to more financially secure citizens who may face illness or unemployment. The expansion of the welfare state has been made possible by government regulation that created a balance of power between governments, large corporations, and the financial sector. This strategic balance allowed governments to create social arrangements, such as the advanced welfare state.
The Golden Age of Capitalism ended during the early 1970s. It has been succeeded by slower growth and a series of global financial crises related to the triumph of neoliberal market globalism. This political and economic arrangement is based upon a deregulation of the corporate sector, the privatization of public enterprises and institutions, tax reductions for businesses and individuals, the setting of limits on the powers of labor unions, reducing the role of government in the formulation of social policies, and deregulating capital flows in the new global investment markets.
These developments have coincided with the flourishing of unregulated offshore financial institutions and shell company strategies, some of them legal, others illegal, they have facilitated massive tax evasion by the rich and embezzlement from the poor.
These financial schemes retard social development in developed and undeveloped countries alike by removing trillions of dollars from the societies that need them to promote social development. Post-war globalization after 1945 has also produced a global political dimension apart from the political forces that have promoted neoliberal policies.
The founding in 1945 of the United Nations, the successor to the League of Nations that had failed during the 1930s, marked a renewal of the idealistic internationalism that flourished prior to the First World War. The United Nations embodies hopes for effective global governance and regulations that remain largely unfulfilled.
The emergence during the postwar period of many Non-Governmental Organizations, or NGOs, has been a response to the limitations of international institutions, such as the United Nations. NGOs also respond to the fact that many nation-states are unwilling or unable to formulate or carry out a variety of important humanitarian and environmental projects. For this reason, the globalization of our own era includes NGOs, such as Human Rights Watch, Amnesty International, Transparency International, and Greenpeace, among many others.
NGOs are modern examples of idealistic internationalism, and their missions remind us that today’s globalization can be defined to include to poor and vulnerable people as well as to the endangered planet we all inhabit.
Source: Hoberman, University of Austin Texas, http://www.utexas.edu/