Global Economic and Political Shifts: Europe, Asia, and Neoliberalism

Posted on Oct 17, 2025 in History

1. Western Europe: Post-War Transformation and Crises

1.1. Political Systems: Democracies and Dictatorships

Democratic political systems were established in some Western European countries after World War II, while in others, democracy did not arrive until the 1970s. Dictatorships persisted in Portugal and Greece until 1974, and Franco’s dictatorship lasted from 1939 until 1975 in Spain.

1.2. Economic Expansion in Western Europe

Several factors fueled significant economic growth:

  • The application of technological advances in the production process increased productivity.
  • The expansion of international trade, thanks to the reduction of customs tariffs.
  • Increasing demand for labor in developed countries resulted in the emigration of workers.
  • Increasing demand for consumer goods, as a result of a greater number of workers receiving better wages.

1.3. A Period of Intense Social Change

This era saw the rise of two key societal structures:

  • Welfare State: A system designed to protect the health and well-being of its citizens through government services.
  • Consumer Society: Expanded rapidly as the middle class grew quickly into a large social group, driving demand for goods and services.

1.4. Economic Crises

Western Europe faced several significant economic downturns:

The Oil Crises

  • 1973 Oil Crisis: The Organization of Petroleum Exporting Countries (OPEC) increased oil prices. The USA and its allies suffered an oil embargo due to the Arab-Israeli War.
  • 1979 Oil Crisis: Iranian oil production fell due to the Iranian Revolution and subsequent war. Recession spread, and unemployment increased globally.

Neoliberal Policies

In response to recession, countries like the UK adopted neoliberal policies, including privatizing the public sector and decreasing public spending.

2007 Financial Crisis

Speculation in the US stock market extended to Europe, leading to widespread financial instability, resulting in cuts in public spending and government investment across the continent.

1.5. An Ageing Population

Europe experienced an ageing population starting in the 1980s, resulting from higher life expectancy and declining birth rates. This demographic shift created increased demand for specialized health care, pensions, and social services.

2. The European Union: Integration and Expansion

2.1. The Birth of the EEC

The initial objectives of European integration were:

  • To establish a single common market by eliminating customs tariffs.
  • To avoid new wars and establish a political and economic bloc capable of competing with the US and the USSR.

Key founding steps:

  • 1951: The creation of the European Coal and Steel Community (ECSC) by the Treaty of Paris. Founding members included France, Italy, Luxembourg, West Germany, Belgium, and the Netherlands.
  • 1957: The creation of the European Economic Community (EEC) and the European Atomic Energy Community (EURATOM), both established by the Treaty of Rome.

2.2. From the Single European Act to the EU

  • Single European Act (SEA): This was the first major revision of the Treaties of Rome. It committed member countries to strengthen EEC institutions and move toward a single European currency.
  • The Maastricht Treaty (1992): Established the European Union (EU) based on five pillars:
    1. A single common market, including the future adoption of a single currency (the Euro).
    2. Common foreign and security policies.
    3. Joint cooperation of member countries in justice and internal affairs.
    4. Policies concerning industries, communication, and energy networks.
    5. European citizenship, allowing EU citizens to travel and live freely in any EU country.
  • The Treaty of Amsterdam (1997): Focused on fundamental rights, EU targets to promote progress, and incorporated the Schengen Agreement, an EU law that abolished border checks for all member countries except Britain and Ireland.

3. Changes in East Asia: Economic Miracles and Political Shifts

3.1. Economic Growth of Japan

Japan achieved remarkable economic growth due to several factors:

  1. A highly productive industry focused on high-quality products.
  2. A flexible industrial organization combining multinational corporations and small companies.
  3. An abundant, well-qualified workforce.
  4. Substantial investment in research and development (R&D).
  5. Significant foreign investment, particularly from the developed world.

3.2. The Four Asian Tigers

The “Four Asian Tigers” are Taiwan, South Korea, Singapore, and Hong Kong. These territories were open to Western influence and applied economic policies similar to Japan’s. Their key difference was that their governments actively promoted the creation of new companies by providing direct help and liberalizing their markets.

3.3. China under Mao Zedong

  • 1949: Mao Zedong established the People’s Republic of China after the Communist Revolution. He ruled China from 1949 until 1976, initially following the Soviet model.
  • 1958: The Great Leap Forward: A five-year economic policy that organized the population into people’s communes. It failed disastrously, causing widespread famine and millions of deaths, which increased opposition to Mao.
  • 1966: The Cultural Revolution: Launched to strengthen Mao’s position. He built up a cult of personality, notably through the distribution of his book, the Little Red Book.

3.4. Chinese Economic Reforms

After Mao Zedong died, Deng Xiaoping implemented significant reforms:

  1. Opening up to foreign trade.
  2. Less state-controlled planning of the economy.
  3. The emergence of the free market in certain economic sectors.
  4. Attracting foreign investment to build factories and infrastructure.

4. Global Interconnection: Characteristics of Globalization

4.1. Defining Globalization

Globalization is the process by which countries around the world are increasingly interconnected and interdependent.

4.2. Characteristics of Globalization

  1. The opening up of international trade, facilitated by more efficient transport and free trade agreements.
  2. Freer financial markets, allowing the free movement of money between countries, with fewer restrictions on stock market operations and cross-border investment.
  3. Outsourcing: To reduce production costs, companies transfer different stages of the production process to outside suppliers rather than completing these processes internally.
  4. Multinational companies exert great influence on governments and international institutions thanks to their size and resources.
  5. Improvement in Information and Communication Technology (ICT), including increased internet speed, smartphones, and communication networks, which have facilitated production and distribution.
  6. The rise of powerful international institutions, such as the World Trade Organization (WTO), often controlled by major world economic powers.

4.3. Globalization and Neoliberalism

Globalization is taking place at a time when neoliberalism dominates economic thinking. Neoliberalism advocates for:

  1. The economy should be liberated from state intervention; financial and labor markets should not be subject to excessive government laws.
  2. The market should be free of legal obstacles and taxes in order to open up international trade.
  3. Private enterprise and private investment should replace the public sector where possible.