Four phases of globalisation
In the view I develop at length in my 2016 book, The Great Convergence, there have been four phases of globalisation in human history; here is a brief summary (the follow-on blog posts flesh these out). Climate change launched Phase 1.
Phase 1: Humanising the globe (300,000 BCE–10,000 BCE)
Climate change allowed (or forced, it doesn't matter in this context) people out of Africa, and these people followed their food, fanning out across the globe. Consumption and production were bundled, but not in fixed locales.
The (Neolithic) agricultural revolution transformed Phase 1 into Phase 2.
Phase 2: Localising the global economy (10,000 BCE–1820 CE)
For the first time, agriculture brought the food to the people who wanted to eat it. If you will, production was coming to consumption instead of the other way around. This phase saw the rise of seven ancient civilisations in what are known today as Iraq, Iran, Turkey, Egypt, China, India/Pakistan, and Greece/Italy. For the first time production and consumption were bundled in particular locations, so it could be called the 'first bundling'.
The steam revolution shifted Phase 2 to Phase 3.
Phase 3: Globalising local economies (1820–1990)
The steam revolution and Industrial Revolution meant goods could be sent efficiently over long distances by land and sea. Steam thus unleashed spectacular transportation capabilities that made it economical to consume things that were made in far-away places.
This was the 'first unbundling' of production and consumption. It was caused by a steep drop in the cost of moving goods. But, even as production dispersed globally, it concentrated locally at the level of factories and industrial districts. For example, most of Britain deindustrialised during the Industrial Revolution. Cottage industries disappeared, and all the industrialisation took place in a handful of tightly circumscribed regions.
This combination of big markets and hyper-concentration of production would create what Kenneth Pomeranz called The Great Divergence in his 2001 book. In other words, this is when (and why) today’s rich nations got rich, while the rest of the world did not.
The Information and Communication Technology (ICT) Revolution shifted Phase 3 to Phase 4.
Phase 4: Globalising factories (1990–present)
In the fourth stage, the ICT Revolution radically lowered the cost of moving ideas as well as goods over long distances. Therefore, it lowered the cost of coordinating complex activities at distance, which changed – and continues to change – the nature of globalisation. In particular, for the first time, it became organisationally feasible to separate stages of manufacturing production over long distances. Bombardier could make the tails of business jets in Mexico knowing that they’d fit on to fuselages made in Quebec. Factories could be unbundled geographically; I called this the 'Second Unbundling' in my 2006 paper, "Globalisation: The Great Unbundling(s)", that introduced the broader perspective on globalisation that forms the intellectual backbone of my 2016 book.
Once this production unbundling was feasible, the vast divergence in wages that had appeared during the Phase 3 made the separation profitable. Rich-nation firms offshored labour-intensive stages to nearby low-wage nations. As I argued in my 2016 book, this is a critical part of a 'Great Convergence' that is occurring now. It is what some others have called the emergence of emerging economies, or the 'rise of the rest'. It has brought the share of global GDP attributed to the G7 today back down to where it was in 1900.
