World-Size Global Markets Lead to Economic Instability

Economic and cultural globalization is one of the most important processes humankind has been undergoing lately. This process is assumed to be leading the world into a wealthy society with a better life. However, the current trend of globalization is not unprecedented in human history, and has had some severe consequences in the past. By applying a quantitative analysis through a microscopic representation we show that globalization, besides being unfair (with respect to wealth distribution), is also unstable and potentially dangerous as one event may lead to a collapse of the system. It is proposed that the optimal solution in controlling the unwanted aspects and enhancing the advantageous ones lies in limiting competition to large subregions, rather than making it worldwide.