Structural Economic Change
In 1891 about 44% of us would have had a better
than average chance of being farmers.
By 1940 only 10% of us would have been farmers,
but about 30% of us would have worked in a
factory.
Today there is a better than 60% chance that
you'll be working in the services sector, and less
than a 2% chance you’ll be in the resource sector.
The first thing to do then is to look at macro
economic change in the economy as a whole.
To Do Today List
Approaches to Characterising Economic Eras:
Revolutions – Agriculture and Industry.
Capital.
Globalisation as an Economic Process:
Pre-global processes.
The post-war globalised world.
On Becoming Urban:
Urban growth versus urbanisation.
Demographic transition, urbanisation economic change.
Space, Geography, Territory:
The Global Village.
The Rise and Fall (and rise again) of Colonisation.
Money, Thought, Transformation
Mercantilism + Renaissance
=
Revolution
Money + Freedom
=
A New World Order
Mercantilism + Renaissance = Revolution
Refers to an era when trade became the principal means of
wealth generation.
Begins in 12th century with opening of trade routes by crusades.
By 15th to 17th century Age of Exploration leads to expanded
resource base and trade routes.
By 18th century immense surplus of capital generated in Europe
through trade, along with banks and currency.
→ the creation of a wealthy merchant class that contrasts with
the “landed gentry” of the Middle Ages.
Fundamental shift in how money was earned and who
owned it.
Mercantilism + Renaissance = Revolution
Transition from medieval to modern history starting in the early
14th century.
Across 15th to 19th centuries the Ages of Reason and
Enlightenment were in full bloom in Europe.
Characterised by the emancipation of scientific thought and
methods of inquiry, → discovery of the scientific principles
necessary for the development/application of machinery.
Freedom from religious interpretations of nature and social
behaviour → critical reappraisal of the political economy and the
development of democratic capitalism in most of Europe.
Fundamental shift in human world view.
Mercantilism + Renaissance = Revolution
Transition from a chiefly agrarian society to an industrial
society, early 18th century, U.K.
Characterised by the application of scientific principles and
inanimate power sources to the development and use of
industrial machinery in producing goods.
Creates a new division of labour: factory workers who
produce and consume goods, → market that is
consumption driven.
Starts process of urbanisation, growth of personal &
national wealth → the creation of public institutions.
Result is a new type of political economy –
capitalist democracy.
Deconstructing Economic Eras
There are different ways to classify and analyze
the social and economic transformation to the
modern industrial economies brought about by
mercantilism and the renaissance, and we are
going to look at two interrelated approaches:
Revolutions Approach
Agricultural (3) and Industrial (6)
Capital Approach
Competitive, Organized, Disorganized
Agricultural Revolutions Approach
Neolithic: @10,000 years ago, domestication, tool
use, end of wide spread hunter-gatherer and
nomadic society and beginning of urban growth.
British: 1730s-1800s, application of science,
mechanisation, four field rotation, selective
breeding, enclosure, drives industrial revolution
with surplus food and workers.
Green Revolution: 1930s-1960s, application of
chemical and biological tools to create high yield
crops, and the creation of factory systems of
agricultural production.
In each case the result was greatly
increased output at greatly decreased cost.
Industrial Revolutions Approach
So far, six of them, starting around 1730 in Britain.
All involve changes that increased output of
manufactured goods significantly.
This resulted in knock-on effects for the socio-economic
and environmental systems in which they occurred.
Most significant changes involve the application of new
technology to either or both of:
Production systems.
Consumption of goods.
In each case, again, the result was greatly increased
output at greatly decreased cost.
The Six Industrial Revolutions – 1 & 2
(Dates based on U.K. experience)
First Industrial Revolution (1730-1820s in UK)
cottage to factory system, human to water
then coal/steam power, innovations to
inventions, manufacturing moves to urban
areas, ‘invention’ of the factory worker.
Second Industrial Revolution (1830s-1880s)
steam technology applied to transportation,
complex organisational structures, MN firms
begin, ‘The American System of Manufacture’,
labour saving devices, mass production.
The Six Industrial Revolutions – 3 & 4
Third Industrial Revolution (1880s-1939)
Science and technology linked, Systematic and
organised R&D, Mass consumption culture
begins, WW 1 stimulates R&D and changes
labour patterns gender-wise, automation,
electrification, the oil economy starts.
Fourth Industrial Revolution (1945-1974):
WW2 destruction, technical innovation,
transformed labour patterns, Complex
organisational structures (TNCs), servicemen
provide well trained labour force, and huge
economic demand. Mass Consumer Society
becomes engine of growth in the U.S.
The Six Industrial Revolutions – 5 & 6
Fifth Industrial Revolution (1974-2000)
‘Oil crisis’ of 1974 threat to manufacturing, aging U.S.
manufacturing infrastructure, foreign competition,
international division of labour, offshore production,
J-I-T manufacturing systems, automation and cheaper
offshore production, decreased labour dependency in
developed economies, manufacturing declines and
growth in services, especially finance, begins.
Sixth Industrial Revolution (2000 until ??)
Decline of developed world’s manufacturing,
globalization leads to increasingly ‘stateless’ TNCs in
an increasingly territorial world, consumerism begins
in the rest of the world, financial sector risk taking
increasingly impacts whole economy, environmental
impacts noticeably affect global systems.
What Is Capital?
One of the “factors of production” in the production cycle
(seen earlier) and refers to two things:
First, the money used to fund anything is called financial
capital.
Second, non-financial capital refers to the goods, capital
assets such as infrastructure, produced by or used in the
production process.
Broader definitions can include land (or natural) capital,
social capital, human capital, and examples would be:
The machines that make goods.
The machines that make machines that make goods.
Trucks, ships, railways, etc.
Roads, schools, hospitals, etc.
‘Brawn” and ‘brain’ labour.
Capital Approach
Comes from the development of capitalism, which
refers to the increasingly private ownership of the
means of production for profit.
Starts after the end of feudalism (14thC) with the
development of mercantilism and thus private
ownership of wealth (capital) by people other than
the aristocracy.
This money eventually gets used to produce goods
and to buy goods, thus capitalism develops as an
economic system of exchange.
Results in at least four major capitalist eras.
Capital Approach
Competitive Capital (1730-1880) - 1st & 2nd industrial revolutions.
Mechanisation and division of labour to extract ‘surplus value’.
Organized Capital 1: Imperial capitalism (1880–1945) 3rd IR
Organised production, labour, government and finance sector begins.
Organised Capital 2: Advanced Capitalism (1945 to 1974) 4th IR
Decolonialisation, global control of production and government.
Application of capital to production of consumer goods.
Disorganized Capital (1974-present) - 5th & 6th IR
Territorialisation and homogenization of the Global Village.
POST WAR PERIOD VERY IMPORTANT
Read the following four slides for major characteristics of
capital eras.
A Short History of Globalisation
For our purposes three periods to discuss:
Pre- 1945
@1870-1914: growth, innovation, expansion
1918-1945: risk taking → crash → sobering reality.
1945 to 1973
Global institutions → prosperity → naiveté.
1973 to present
Mid 70s to mid 80s – shock and pessimism.
Mid 80s to mid 90s – recovery and restructuring.
Mid 90s to mid 2008 – growth and greed.
Post 2008 – sobering reality - or not?
POST WAR PERIOD
HISTORY - PRE GLOBALISATION
Pre 1945 1945-1973 1973-Now
1870 until 1914:
Growth of capital, labour, and trade.
Innovations in transportation & communications
technology.
1918-1945 (complicated hiatus):
WW I (1914-1918) caused cessation in growth & trade,
then huge growth (roaring twenties) until ended by...
... the Great Depression (1929-1932) & after …
... protectionist policies stifled growth and international
trade until after WW2.
Was perhaps the first stage of globalisation though this
would be disputed as merely a continuation of
internationalization and economic liberalism.
HISTORY - PROCESS - POSTWAR
Pre 1945 1945-1973 1973-Now
Period of unprecedented growth and prosperity in the
west under the Keynesian model.
Birth of many impoverished nations.
Politically, world divides into 1st, 2nd, and 3rd worlds.
Economically, each has very different characteristics.
Socially, creation of the ‘global village’ of McLuhan.
Three global economic structures:
1. Bretton Woods: World Bank, IMF, gold to currency.
2. Marshall Plan: $14b to rebuild Germany and Japan.
3. GATT: Free trade among signatories.
Watershed: 1973 oil crisis
Cessation of western growth and prosperity.
Rebirth of free market thinking.
GLOBALISATION - POST WAR HISTORY
First, Second, and Third World Regions
Originally political labels coined in the late 1940s.
The First World - Capitalist Democracies
Countries that aligned themselves with the capitalist
democracies of the (mostly) west were called the First World.
The Second World - Socialist (mostly) Autocracies
Countries that aligned themselves with the socialism of the
(mostly) Soviet Union were called the Second World.
The Third World - Non-Aligned (neutral)
Countries that did not align themselves with either were called
the Third World. The original 3rd world countries were Austria,
Finland, Ireland, Sweden, and Switzerland. Only in the 1970s did
the Third World label come to mean underdeveloped nations
because many were newly decolonialised and poor.
Bretton Woods (1944)
The most significant political and economic event of the 20th
century.
Shaped (and continues to shape) the political economy of the
1st and 3rd worlds, and increasingly the ex-“2nd” world.
Three important economic institutions:
The International Monetary Fund (IMF).
The International Bank for Reconstruction and Development
(The World Bank).
Establishment of fixed exchange rates using the U.S. dollar as
a reserve currency, it in turn fixed to a $35 ounce gold
standard.
GLOBALISATION - POST WAR HISTORY
The Marshall Plan (1948-1952):
US$17 billion (US$223 billion 2014 dollars) injected
into war torn economies in Europe and Asia.
Money to West Germany and Japan in order to ‘win
the peace’ and not repeat Versailles Treaty.
Also, to build a ring of containment around the Soviet
Union’s “Iron Curtain”.
Rebuilt economies of the two principal axis powers
(Germany and Japan) allowed them to dominate post
war manufacturing.
GLOBALISATION - POST WAR HISTORY
The General Agreement on Tariffs and
Trade (GATT, 1947):
Designed to prevent similar protectionist policies that
crippled the post depression global economy.
Free flow of capital and goods essential for a healthy
economy.
Signatories got freer trade among themselves, and
trade protections from competitors.
Since 1995 superseded by the WTO (World Trade
Organisation).
GLOBALISATION - POST WAR HISTORY
A Brief Summary of the Period
Pre 1945 1945-1973 1973-Now
Remarkable growth rates (8-10%) for developed
western economies.
Trade increased more rapidly than production.
Offshore production starts.
International division of labour starts.
A few smaller newly industrializing economies began
to prosper based on comparative advantage in labour
costs.
Many third world nations born but languish.
GLOBALISATION - POST WAR HISTORY
Post-war prosperity ends with the…
…1973 oil crisis
GLOBALISATION - POST WAR HISTORY
Much more on oil in the resources lecture, but for
now the impact of The Oil Crisis…
… the first one.
GLOBALISATION - POST WAR HISTORY
100.00
Hostage crisis ends,
2008
January 1981.
financial
Non-OPEC oil
crisis.
becomes
economically
feasible. OPEC
2003 - Iraq
increases supply
War and
and price drops.
Venezuelan
general
strike.
Asian
October 19th-20th 1973
financial
Oil embargo begins.
crisis.
Iran takes US
hostages. Saudi
80.00
Arabia raises
market crude from
$19 to $26 barrel.
60.00
40.00
20.00
0.00
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Price Per Barrel Constant (2012) Dollars
120.00
The
price of oil quadruples to nearly $12 per barrel ($58 today). US and
Oil Price
Per Barrel,
Constant Israel
(2012)
Dollars,
1965-2012
Netherlands
embargoed
for supporting
in the
1973 Yom
Kippur war.
Pre 1945 1945-1973 1973-Now
Post Oil Crisis – 1973 until now
History has yet to “officially” characterize the past four decades
but we can possibly see it as:
Mid 1970s-80s: A decade of shock and pessimism.
Oil crisis, obsolescence, gold standard, 3rd World debt.
Mid 1980s-90s: A decade of recovery and restructuring.
Free markets, FDA, finance sector, monetarism, shift to right.
Mid 1990s-2008: A decade of growth and greed.
Finance sector meltdowns, TNCs develop, Glass Steagal repealed.
Post 2008: Perhaps now, a decade of sobering reality?
Sovereign debt, terror, China/India, an aging frustrated west.
Read the following five slides for major characteristics of the disappointing decades.
GLOBALISATION - POST WAR HISTORY
URBANISATION
On Becoming Urban…
Urban areas are:
Dense collections of people.
The largest machines on earth.
Nodes in the global network of interaction.
Collections of production and consumption chains.
Points of economic, demographic and cultural transformation.
They are comprised of and driven by:
Form & structure, and the processes that give rise to it.
Change in response to economics, technology, demography, culture.
We humans were not always an urban species – we became such in
response to major transformations in the way we convert resources
into lifestyles.
URBANISATION
World Urban Population
REGION
WORLD
North America
URBAN POP 1955
850 million (30%)
125 million (67%)
URBAN POP 2015
3,819 million (52%)
301 million (83%)
Latin America
Europe
Asia
87 million (45%)
307 million (53%)
280 million (18%)
510 million (80%)
532 million (73%)
1,970 million (45%)
41 million (16%)
477 million (42%)
Africa
Africa and Asia still not quite 50% “urban” but urban
growth rates there have been by far the most rapid of
any region since 1955. Asia also has 6 of the 12 largest
cities and Africa has 2 of them.
Urban Growth versus Urbanisation
Urban Growth
Total
Population
Growth
Rates/Share
Rural
Urban
10,000ya
Time
URBANISATION, DEMOGRAPHIC
TRANSITION, ECONOMIC CHANGE MODEL
1700s
Urban Growth versus Urbanisation
Urbanisation
Total
Population
Growth
Rates/Share
Rural
1700s
Urban
Time
URBANISATION, DEMOGRAPHIC
TRANSITION, ECONOMIC CHANGE MODEL
Present
Urbanisation Stages
100%
80%
Urban
Share of
Population
20%
0%
10,000ya
To 1700
Terminal Stage
high levels, low rates
Growth Stage
increasing levels, high rates
Initial Stage
(low levels, low rates
1850-1950
(depends on
Time
URBANISATION,
DEMOGRAPHIC
country)
TRANSITION, ECONOMIC CHANGE MODEL
Present
Urbanisation, Industrialisation, Demographic Transition
Relationships between these 3 processes shape
modern societies.
Is a cause/effect cycle where all elements must stay
synchronized for economic development to occur.
For the developed world this has occurred over the
past 100+ years.
For developing nations, they have occurred over a 2030 year period - or are in the process of occurring.
Leads to developmental problems for virtually all
newly industrializing nations.
URBANISATION, DEMOGRAPHIC TRANSITION, ECONOMIC CHANGE MODEL
Natural
Increase
The Demographic Transition Model postulates four stages
of demographic change premised upon the interplay of
birth and death rates and resulting population change
Economic transition reflects the changing
employment profile for sectors of the economy
and how people earn a living.
URBANISATION, DEMOGRAPHIC
TRANSITION, ECONOMIC CHANGE MODEL
Urbanization (urban transition) is the process
wherein a predominantly rural population migrates to
become predominantly urban one.
URBANISATION, DEMOGRAPHIC
TRANSITION, ECONOMIC CHANGE MODEL
The stages of each
transition must
more or less
synchronize for
economic
development to
occur.
URBANISATION, DEMOGRAPHIC
TRANSITION, ECONOMIC CHANGE MODEL
URBANISATION, DEMOGRAPHIC TRANSITION, ECONOMIC CHANGE MODEL
25
Demographic Transition
50
40
15
Death Rates
10
35
Rates per 1000
Rate Per 1,000 Population
45
20
Birth Rates
30
25
20
15
10
5
Demographic
Transition
0
-5
5
0
Years
Year
Birth Rate
Employment
Change
Percent Employment
8
7
6
5
North…
4
3
Stage 1
Stage 4
2
1
2000
1997
1994
1991
1988
1985
1982
1979
1976
1973
1970
1967
1964
0
1961
Natural Increase
Percent Employment in Agriculture
Percent Employment
Percent Employment in Agriculture
Death Rate
90
80
70
60
50
40
30
20
10
0
Sub Saharan…
Year
Year
Urban Share of Total Population
90.0
60.0
Percent Urban
80.0
Urban Share of Total Population
Urban
Population
Percent Urban
Europe
70.0
60.0
50.0
E…
50.0
40.0
30.0
40.0
Sub Saharan Share
20.0
30.0
Stage 4
20.0
10.0
Stage 3
10.0
0.0
0.0
Year
DEVELOPMENT - TRENDS
Year
Developing World
Current
point
in time
Stage 4
Stage 3
Europe Demographic Transition
Space, Geography, Territory
SPACE GEOGRAPHY TERRITORY
Territory, Geography, Space
Territorial Implications:
More and more nations from 1945 as
decolonialisation occurs – 56 in 1945 to 198 in 2015.
Geographical Implications:
More complex culture, language, social, religious,
economic, legal, boundary landscapes to navigate.
Spatial Implications:
Development of Global Village has led to rapid
movement of ideas, money, people, problems,
conflicts, both because and in spite of more nations.
SPACE GEOGRAPHY TERRITORY
The Global Village
Marshall McLuhan, technology and the global village (1962):
information, ideas, attitudes travel at the speed of light though
mass media ‘reducing’ the size of the earth to that of the village.
Reasons and Repercussions:
Transportation and technology improved significantly with WW2.
Large global movements of people (military, refugees, migration).
Tourism and travel begins to expand rapidly.
Rapid resource extraction, production & consumption.
Growing number of nations → new geopolitical interest.
Often aggressive foreign policy initiatives.
Everyone knows everyone else’s business.
The demonstration effect and societal homogenization.
Darker side of the global village:
Darknet, terror, surveillance, sex tourism, human trafficking.
SPACE GEOGRAPHY TERRITORY - THE GLOBAL VILLAGE
The Global Village(s)
Also means, for our purposes:
more and smaller nations, and as a result…
… more borders and boundaries…
… more laws, more rules …
… more corruption.
… and thus more ways to circumvent them:
Increase in number of sectoral and regional blocs.
Sophistication of financial sector.
Communications and technology innovations.
Which in turn leads to:
More channels for disease and contraband.
More intra and inter regional conflict.
More disenfranchised groups, leading to…
… more terrorism.
Colonialism, De-colonialism, and Neo-colonialism
Colonialism: the political and economic control of
another region for the purposes of resource
exploitation, security, political, cultural and/or religious
“enlightenment”.
Many clear cut examples of colonialism but sometimes
the definitional boundary is blurred:
Examples:
• 1853, Commodore Perry, the U.S. and Japan.
• 1907 U.K. installation of a monarchy in Bhutan.
• 1970s-80s U.S. Domino Effect foreign policy.
• Various recent Middle East military adventures.
• Various corporate resource exploitations.
• The rise of radical Islam.
SPACE GEOGRAPHY TERRITORY COLONIALISATION
Decolonialism and the Rise of Modern Nation States
All but @30 of the @200 modern nation states of the world
resulted from the past 70 years of decolonialisation.
Three major areas and phases:
The Americas, Australia and New Zealand, 1776 to 1900.
Original 100 colonies of The Americas, plus Australia and NZ.
Africa, S-E Asia, Asia, the Caribbean & Oceania, 1945 to 1980.
Post WW2 European colonies. Led to many conflicts and corrupt
governments.
The former Soviet Union, after 1990.
Dissolution of the former USSR in 1991 created 15 new nations.
Read the following three slides for details.
SPACE GEOGRAPHY TERRITORY - COLONIALISATION
The Colonial World 1492-2007
2ndnd wave of decolonisation begins.
2wave
wave
ofcolonisation
colonisationbegins.
begins.in 1993.
st wave
of
decolonisation
begins
rd
of
13strd1wave
of
decolonisation
3 wave of colonisation begins.
SPACE GEOGRAPHY TERRITORY - COLONIALISATION
The Colonial World, 2016: Welcome to Wal-Mart
SPACE GEOGRAPHY TERRITORY - COLONIALISATION
Not today, even though this is a good
place for it.
You’ve had a stressful day 
I’ve moved it two weeks hence into the
Data, Methods, Classifications lecture.