Globalization, Markets, and the State – Key Vocabulary

A comprehensive set of vocabulary flashcards covering major concepts, institutions, and phenomena discussed in the lecture notes on globalization, trade history, inequality, and the European Union’s strategic challenges.

Myth of Globalization

The idea that, despite worldwide contact, true cultural understanding and uniformity have not been achieved.

Cultural Intelligence (CQ)

The capability to relate and work effectively across cultures by understanding differences—including one’s own.

21st-Century Paradox

The tension created by English dominance and digital communication that makes us believe easy contact equals genuine understanding.

Cross-Cultural Dilemma

Misunderstandings that arise when people assume shared meaning simply because communication is technologically effortless.

Culture Shock (Invisible)

Subtle disorientation in global settings that often goes unrecognized due to assumed familiarity.

Garraway’s Coffeehouse Auction

A 17th-century London sale that signaled how global trade could instantly reshape local markets (high-quality furs replaced low-quality ones).

Coureurs des Bois

Independent French-Canadian fur traders such as Radisson & Groseilliers who operated in New France.

Hudson’s Bay Company (HBC)

A 1670 chartered company given monopoly fur rights over Rupert’s Land; functioned like a private state.

Rupert’s Land

Vast territory (≈40 % of modern Canada) granted to HBC, where it held quasi-sovereign powers.

Chartered Trading Company

A firm granted exclusive trade rights by a crown or state, often blending commercial and governmental functions.

Proto-Government

An organization, such as HBC, that exercised state-like powers without being an actual state.

Atlantic Triangular Trade

17th-18th-century network moving African slaves to the Americas and colonial goods to Europe.

Indian Ocean Trade Route

Sea lanes opened by Vasco da Gama that linked Europe directly to Asian markets, bypassing Muslim and Venetian middlemen.

English East India Company

1600–1858 British chartered firm that controlled trade and territory in Asia, maintained armies, and minted currency.

Mercantilism

Early-modern economic doctrine favoring state-backed monopolies, tariffs, and bullion accumulation.

Economic Liberalism

Adam Smith’s idea advocating free markets, competition, and limited government roles in the economy.

Transaction Costs

The frictions—legal, logistical, informational—incurred when making an economic exchange.

Institutional Infrastructure

The legal order, security, and public goods that lower transaction costs and enable markets.

Long-Term Relationships

Trust-based arrangements that reduce risk of cheating and cut transaction costs without formal enforcement.

Norms & Belief Systems

Shared moral codes that govern behavior, thereby lowering the need for costly legal enforcement.

Third-Party Enforcement

Courts, police, or regulators that legally compel parties to honor contracts.

Public-Private Partnership

Collaboration where private firms exercise public powers, typical of chartered companies in empire-building.

Growth of the Public Sector

Historical trend toward larger government spending as economies become more open and citizens demand protection.

Welfare State

Government system providing social insurance; tends to expand in economies highly exposed to global trade.

Global Governance Gap

Absence of a world authority capable of enforcing rules, which keeps global transaction costs high.

Globalization Paradox

The conflict between the need for strong institutions in markets and states’ reluctance to cede sovereignty globally.

Branko Milanovic

Economist who mapped global income changes and identified winners and losers of 1988–2008 globalization.

Elephant Curve

Graph showing large income gains for emerging-market middle classes and top global 1 %, but stagnation for lower-middle classes in rich nations.

Purchasing Power Parity (PPP)

Method adjusting incomes for cost-of-living differences across countries in global inequality studies.

Global Middle Class

Group around the world’s income median—rapidly expanded due to growth in China, India, Indonesia, Brazil, etc.

Golden Age of the U.S. Middle Class

1947–1977 period marked by high wages, strong unions, and mass higher education.

Virtuous Cycle (Reich)

Positive feedback loop where rising wages boost spending, hiring, tax revenue, and public investment.

Wage Stagnation

Flat real earnings in advanced economies since the 1970s, leading families to rely on dual incomes, longer hours, and debt.

Inequality for All

Robert Reich’s documentary emphasizing the economic and political costs of widening income gaps.

Financialization

Shift toward finance as the fastest-growing sector, fueled by deregulation and contributing to inequality.

Citizens United Decision

2010 U.S. Supreme Court ruling that increased corporate and wealthy individuals’ influence in politics.

Multipolar World

Current international system with several significant power centers (e.g., U.S., China, EU, Russia, India).

Strategic Autonomy (EU)

EU ambition to act independently in defense, technology, and policy without excessive reliance on others.

EU-Mercosur Agreement

Proposed trade pact between the EU and South American bloc, viewed as a test of EU global agency.

Hybrid Warfare

Strategy combining conventional, cyber, and information tactics, used by Russia to undermine adversaries.

Coalitions of the Willing

Ad-hoc groups of states cooperating when full EU consensus is blocked by internal dissent.

Disruptor State

Country actively challenging existing rules and institutions (e.g., Russia in Europe).

Letta & Draghi Reports

EU policy proposals calling for major investment in technology, climate action, and defense to retain relevance.

Transatlantic Security

Defense ties linking Europe and the United States, now perceived as less certain.

Global Contact vs. Communication

Distinction emphasizing that mere interaction does not guarantee mutual understanding.

Dominance of English

Prevalence of English in global commerce, which can obscure cultural nuances and breed overconfidence.

Digital Reliance

Dependence on electronic communication that may reduce depth of cross-cultural comprehension.

Market-Enabling State

Government role in supplying security, infrastructure, and legal order that allow markets to function.

Public Goods

Non-excludable, non-rival services (e.g., roads, defense) provided by states to lower transaction costs.

True Globalization (Unattained)

Hypothetical seamless world market lacking institutional frictions—considered impossible without global governance.

Winners of Globalization

Groups that gained most 1988–2008: top global 1-5 % and emerging-market middle classes.

Losers of Globalization

Lower-middle classes in advanced economies and some of the world’s poorest whose incomes stagnated or fell.