The global economic system is said to have originated in the Industrial Revolution. From the invention of steam power and the resulting development of long distance transportation, the period of invention and innovation that occurred between 1820 and 1890 resulted in a spread of industrialization throughout the world.
Great Britain is given the lead role in the inception of the global economy, where science, invention and spread of technology operated in an environment of very liberal free trade and cross border interaction. The movement of people, goods, labor and capital throught the globe became more effective. The British gold sterling exchange rate standard was implemented. Labor productivity had never been so high or, thanks to slavery and oppression, cheap!
At any rate, the global economy was established for good.
In the late 1980s and 1990s, many governments, especially developing countries, began to believe that economic rationality had to take precedence over political and social rationality, that countries had to stabilize and to engage in rational trade policies, to develop stable market institutions, and to make some concessions toward capitalism.
The biggest problem for developing countries included adopting whole scale debt load, trade liberalization, international payments reforms, and other concepts of development on a western concept of development and economic policy, while maintaining independence from the more problematic and undesired western influences. Global economics had no provisions for comprehending that western influences could ever be undesirable.
The problem lies in the demands to adopt political and social policies that benefit only the developed nations and the financial elites. In other words, many developing countries are pushed to adopt policies that are not in their best interests in order for a few to benefit from increased import and export trade.
In payment reform, the elasticity of payment systems, the volatility of exchange rates and volatility in restrictions to trade are critical factors in the growth or decline of national development. This is because exports drive global economic systems. When trade deficits, cross border disputes, sociopolitical trade restrictions based on labor and enivironmental practices, and monetary exchange problems occur, then the global economy is affected.
The work of the global banks, world trade and world political organizations becomes oriented toward eliminating as many problems that relate to trade as possible.
The problems lie in the public understandings of nations that use abusive labor practices, violate environmental and safety principles in producing their products, or in the political ideology or behavior of the exporting or importing nation. The public perceptions are as legitimate as those of the economic and trade elites.
But public perceptions are considered to be "irrational" processes that are barriers to global economic development. The fact is that these processes are quite rational. They consider important issues that the World Trade Organization, for example, will not consider or resolve. The WTO considers successful international trade to be the only world issue of merit. The WTO then becomes irrational, based on it's fixed focus only on trade and not on the other matters of human subsistence and life endeavors.
The global economic organizations are supposed to work to eliminate as many problems with inelastic payment systems, debt management and monetary exchange rates. The reality is that Haiti, for example, has been handing over most of it's gross domestic income over to France for generations to compensate for the loss of income from slavery. The majority of the world is completely unaware of this debt or of the other egregious debt burdens that have held developing countries back. The recent controversy involving Dubai and slave labor will not be addressed by the WTO.
One dominant area of global economics has been the international investment and speculation markets. The WTO has negotiated trade agreements that requires member nations to allow foreign corporations and interests to purchase property and to have the same rights as domestic corporations to government access and influence. This extends the reach of foreign entities well beyond the realm of economics and directly into the function of governments, where the interests of the people may be overridden in order to accommodate the rights of non domestic political, financial and social entities.
The speculation markets are an entirely theoretical, derivative or probability realm of economic transfer of wealth that produces no real product and provides no real labor opportunities. Global speculation accrues wealth, influence and power based on theoretical constructs. The latest global economic meltdown was averted when the treasure of governments was used to compensate those who were, essentially, gambling. This indicates a problematic influence of suspect financial entites on governments.
Egregious debt, labor and human rights abuses, slavery, international inequities, environmental destruction, and other economic misconduct is rarely considered in discussions of global economics. Yet global economics is persistently billed to be a driving force for the good of all people.
Much of the political volatility and resistance to the powerful elites and governments that run global economies is based in the realities of the world, especially in the developing countries which have a well earned distrust of intrusion into their economic affairs.
The field of Economics is interested in economies, not people. Even the field of Behavioral Economics only considers the aspects of human behavior that negatively impact the production, growth, retention or transfer of wealth.
Yet the reality is that recent global economics has been functioning as an engine of massive redistribution of wealth in vastly more ways than it has functioned as an engine of growth in economic development or in transferring of wealth in ways that improve human life or subsistence.