Modernization and modernization theory are crucial for understanding the history of the world in the last few centuries. Like so many social science theories (dependency theory, the ultimate truth-claim of social history, totalitarianism or dialectical materialism) modernization theory started off with a universal truth-claim and later became recognized as 'merely' another tool in the academic kit. No serious student of history and society today can afford to ignore it.
Modernization theory in its simple form went like this. For thousands of years there existed 'traditional' societies, the nature of which we can mostly ignore. What was important wasn't what they were, but what they became. What they became was "modern", which meant they experienced a shift from agriculture to industry, from countryside to town, from irrationalism to science, from ignorance to literacy, and from feudalism to a pluralistic political structure. For a few decades after World War II, it was thought that the entire of modern world history could be examined within this model. Modernization was choice-free (inevitable) but usually not value-free (it involved a specific political structure).
It doesn't take much thought to realize that this model was derived from a correct understanding of what had occured within Occidental society, with a few notable exceptions which were regarded as peripheral (Nazi Germany being the most obvious). The fact this is a rather simplistic assumption does not immediately invalidate it, especially given the ability of the Western world to act on its beliefs. International monetary institutions which were responsive to Western desires tried to turn modernization theory into a self-fulfilling prophecy, like Marxism for Lenin: except here the midwife of history wasn't violence, but economic and political pressure.
Integration into the global economy does indeed tend to bring about many of the features characteristic of modernization theory - industrial growth, urbanization, and increased education. However, the sticking point has always been the political side of the coin. After decolonization in most parts of the world, new nationalist elites took power with the legitimizing cloak of having fought the battles to bring it about. In many places, these elites were not willing to provide pluralistic politics to their populations, meaning political modernization never came about. Many people think that modernization in the form of democratic reform is inevitable due to the information revolution's spread of knowledge which is an antidote to propaganda, but this is still based on the assumption that given perfect knowledge, people want democracy. Only time will tell.
Two of the most interesting examples of modernization are Japan and Nazi Germany. In Japan, many hoped that the technical and scientific elements of Western modernity could be imported without the concomitant political or normative elements. Japan was only semi-modern when it entered the second world war, bearing unmistakable signs of modernity in the spheres of industral, military and urban development, but little evidence of a shift in values. Indeed, the values of modernity - which at this time exclusively meant the values of the West - were wholeheartedly rejected as weak and divisive. Like the Nazis, the Japanese tried to use modern bureaucracy and industry to construct an Empire based on a utopianism which envoked the glorious traditions of its society. Modernization is largely seen as to blame for provoking a traditionalist reaction against the 'machine civilization' of the West by way of an assertion of traditional spirituality and unity.
This stress of modernization is blamed for many problems in today's world. Firstly, as noted, the appeal of irrational and heroic movements like Japanese fascism and National Socialism are blamed on disgust with modern materialist society - arguably a disgust only levelled when political freedom is seen as unsatisfactory, and hence symptomatic of a deeper resentment. On a smaller but no less consequential level, modernization is blamed for ripping the individual from the comfort of community, religion and solidarity and throwing him into an urban world where nothing is certain and one cannot be sure of one's place in the world. Stormtroopers, Bolshevik cadres and suicide bombers are hence united by a common opposition to and infuriation with modernity.
But truly the impact of modernization has been nearly as universal as the founders of modernization theory thought, although perhaps in different ways. Even the great anti-modern ideologies of the last century have carried unmistakable signs of modernity - the September 11, 2001 attacks would not have been possible without aeroplanes and tight organization, and nor would the Japanese war machine. Alternative ideologies are trying to fight against Western 'colonization' of modernization by proposing their own alternative versions with different values and goals. These debates and battles are among the most important in shaping the prospects for global co-operation in the century to come.
The literature on modernization is vast. For a particularly strong and recent assertion of the modernization thesis, see Francis Fukuyama, The End of History and the Last Man. An understanding of the Japanese experience of modernization can be gained from James Morley, Dilemmas of Growth in Pre-war Japan. The best introduction to Nazi Germany remains Ian Kershaw, The Nazi Dictatorship, which tackles the modernization thesis throughout. The entire literature on Islamic fundamentalism is preoccupied with the problem of modernity, but see especially Bernard Lewis, What Went Wrong? and The Crisis of Islam by the same author, as well as Nilufer Gole, 'Snapshots of Islamic Modernities' in Daedalus, 1999 on the search for an alternative Islamic modernity.