Member-only story
Globalisation and the Wealth of Nations
Why the 21st Century Will Be Another American Century Part 3
Globalisation as we know it comes from specialisation, which Leads to Economies of Scale. The economies of scale mean that the more time individuals focus on one particular task, the more they become specialised and more effective in performing those tasks.
The Economist and philosopher Adam Smith, the author of The Wealth of Nations, first published in 1776, used the example of the production of a pin.
Smith advocated that each part of the production chain should focus purely on the specialisation.
The miners concentrate on the mining, and the People working on the manufacturing, transportation and other services and skills that go into producing one item focus on that part of the supply chain.
A great example of a modern supply chain is one vehicle comprising 21,000 specialised components from different global supply chains. If one part is unavailable nationally, that vehicle won’t run.
In 1945, the USA created a global marketplace for its allies and enemies. For example, the Chinese Communist Party opened its economy after Mao Zedong’s death in 1976, and Deng Xiaoping came to power in 1978.
