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April 4, 2016

Sisyphus with globeThere have been a number of periods in which there has been trade in goods and ideas across and between continents. The current era of globalisation, which started in the dying days of World War II, is quite different. It represents a new approach to globalisation.

The last period of globalisation started around 1870 and ended with the First World War in 1914 and was a major influence in shaping the current era of globalisation. In many respects, the level of interdependence during this period, measured by the movement of capital, technology, ideas and people, was greater than it is today. However, it was fragile, and when put under stress is quickly collapsed. This is because it had shallow roots, based on laissez-faire policies and driven by little more than advances in technology and communications, rather than relying on strong political support.

Despite the collapse of the ideal of greater international cooperation and interdependence in 1914, its supporters did not abandon globalisation. It was briefly revived after the end of the First World War, through the League of Nations, but this body lacked the authority it needed, and it disintegrated in the 1930s. The failure of the League, however, was analysed by a new generation of internationalists who emerged in the 1940s, and they were determined not to repeat the mistakes of the past.

If globalisation was to survive and thrive, they decided, it could not be based on laissez-faire policies but needed to be deliberately constructed around robust institutions, rules and norms. Embedded in these structure was the subversive notion of the rule of law, applying not to individuals but to sovereign states. And not just to the weak states, but also the most powerful. This required a radical redefinition of national sovereignty, which was required to genuflect before international law and institutions.

The result is a global architecture that protects the international laws and norms from states pursuing their own interests.

While the logic behind this ideal is sound, it often has been frustrated by powerful nations determined to protect their sovereign privileges.

The Ascent of Globalisation gives an account of how the architecture was constructed. It describes the compromises that were made and shows how flaws built into the superstructure have led to many of the problems that we see today.

The book is divided into three sections, which roughly follow three major phases of globalisation.

It starts with liberal internationalism in which governments cooperate in creating and enforcing international laws and norms. This is principally done through international agencies such as the United Nations, IMF, World Bank and European Union, which have partially circumscribed the sovereign powers of nation-states. The rise of the formation of each of these institutions is described, the idealism behind them explored and their flaws exposed. Liberal internationalism was largely driven by politicians and bureaucrats.

Freeing international markets was important, but on the understanding that the markets serve mankind, not act as its masters.

The next phase of globalisation started in about 1970, accelerated by the Nixon Shock in which many of the Bretton Woods institutions were undermined.

Whereas liberal internationalism was driven largely by bureaucrats and politicians, this new phase of globalisation was driven by business people, academic economists and think tanks. It was nurtured by neoliberal ideas.

Like liberal internationalism, neoliberal globalisation was also built on the rule of law. But rather than fostering cooperation between sovereign states it looked to laws to protect the free market, the unrestricted movement of capital, corporate investments and intellectual property. Markets became the masters not the servants of mankind.

By the 1990s, neoliberalism had become a major influence on global policy. It did not replace liberal internationalism, and the two have coexisted, at times uncomfortably. The result is a disjointed global architecture which satisfies neither liberal internationalists nor the neoliberal globalists.

In a reaction to the rising power of transnational corporations and international capital, there has been a move since the late-1990s to civilise globalisation by softening the harder edges of neoliberal or market globalisation. The result was greater cooperation on non-economic problems, such as health and the environment, and attempting to tame the unrestrained activities of transnational corporations through voluntary codes and norms.

By the start of the twenty-first century, globalisation is an uncomfortable mix of these three strands, which explains why the so-called global world order is so a disorderly.

In describing the ascent of globalisation, the book tells the story through individual architects. This approach makes the history much more accessible. It also provides new insights into the idealism that drove these men and women, and the compromises that were imposed on them. It goes on to examine how those compromises corrupted the integrity of the global architecture. The result is a global financial system that is inherently fragile, unbalanced and unstable. Free trade agreements have been corrupted, are unfair and have empowered transnational corporations to challenge national environmental, labor and health regulations. Transnational capital is largely unregulated, favoring the powerful over the weak. Transnational institutions such as the European Union and UN are dysfunctional.

Trying to tackle globalisation in one book is an impossible task, and The Ascent of Globalisation is only one slice of this multifaceted phenomena. It differs from earlier accounts, which explain the growth of globalisation as the inevitable consequence of improvements in communication and transport technologies and the advent of the Internet. These accounts fail to appreciate the role individuals had in shaping globalisation.

Only a relatively small number of institutions, laws and norms are considered in the book. Nevertheless, they have been carefully chosen because they have had a major and lasting influence on globalisation.

If you have read Robert Heilbroner’s Worldly Philosophers, you will know how biographical sketches can bring alive complex histories. What Robert Heilbroner did for economics, Harry Blutstein has done for globalisation.

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