Stephen King on Globalisation

What draws your five books together?

The theme that unifies all this, I suppose, is the history of globalisation: how the world has changed in often unexpected ways, and how economists in general are not sufficiently focused on their history. A big chunk of what has happened economically over hundreds of years is typically ignored. Things like crises have happened before, and history gives you a pretty good clue as to why they happen, and what goes wrong. But it’s also a story about how the world economy itself is changing shape. People are struggling to work out the importance of the rise of China, for example. What’s often forgotten is that China was the biggest economy in the world in 1820, and not that long ago was, not quite a superpower, but certainly a very important economic entity. And again, because we’ve come through this tradition in the West of liberal democracy, Enlightenment values, free markets, we sort of believe that somehow that’s how the world has always worked, and that is not particularly true.

So partly a story of the hubris of the Western world?

Yes, I think that’s true, and so my first book is Power and Plenty by Findlay and O’Rourke. What’s particularly good about this is the tremendous detail on the way in which different parts of the world used to trade with each other, and how it helps us to think about a world that wasn’t purely European, or European-plus-satellites focused. The huge amount of trade that took place between the east coast of Africa, India and China hundreds of years ago got forgotten with the rise of European empires, and these kinds of trading routes are now all being re-established. It’s almost like the new, modern-day Silk Road, and the great thing about this book is that it records all the ways in which these trade linkages were created and then destroyed over the last thousand years.

Why were they destroyed?

Part of it was very simple: politically, countries sometimes chose to withdraw. China is the classic case – it really withdrew from globalisation in the 1400s when the Ming dynasty destroyed its ocean-going fleet, then the most powerful in the world, due to the sense that its relationship with the rest of the world was a corrupting influence on traditional Chinese values. But also it was almost by accident, often associated with technologies that were extraordinarily disruptive. 

A classic case is the overland spice trade, which made the Middle East very rich, made Islam powerful for hundreds of years, and created amazing European cities like Venice. Then Vasco da Gama sails around the Cape of Good Hope and finds a seagoing route to all the spices, and suddenly all the middle men who’ve made a fortune out of this overland trade were just cut out of the deal and went into decline. I think there’s a lesson here for today: with all this cheap information, it’s easier for countries that had forgotten how to trade with each other to be able to trade with each other again. 

So it comes up to the present day?

More or less. It goes through a number of different periods from the world economy at the turn of the first millennium all the way up to what it calls the re-globalisation at the end of the 20th century. I think the other thing you forget is that for much of the 20th century there was a collapse in globalisation, which we now take for granted as being a feature of the world economy. Trade was suppressed, often by a lack of technology, but more importantly by a series of dogmatic political views. Anyway, it’s a wonderful book, full of amazing detail, and I can’t think of a better history of the world economy of the last thousand years. I think many economists have forgotten that economics ultimately is rooted in things like politics and geography and history: if you don’t focus on those sorts of things you often lose sight of what’s really going on. 

Next book?

The Wealth and Poverty of Nations. Another huge historical sweep on economic development and, perhaps controversially, this time more a view of why the West has been particularly successful and why other countries have not. I think there’s a danger that recent events may begin to question some of those assumptions, but as a tentative exploration of the issue of economic progress and culture, it’s fascinating. 

One of the stories here is about clocks, and how the Europeans would bring their clocks along when it came to trading with China. Europeans used clocks as a coordinating mechanism: what time you arrived for work, and what time you went home in the evening. Whereas the Chinese initially regarded clocks as being almost a decorative toy, so you’d end up with this weird situation throughout China with extremely long hours being worked in the summer and extremely short hours in the winter, which were all determined by the lack of understanding of this particular technology. 

I think what’s clever about the book in one sense is that it points out that it’s not just the technology that’s important but how you use it. If you invest in lots of computers, unless you can do something with them and work out how you can become more productive, the computers in themselves are utterly useless. There are lots of examples of this in the world: you have to work out how best to use a technology before investing in it.

Landes believes the Western world has been well placed to exploit new technologies?

Yes, there’s a lot of Enlightenment thinking going on in this particular book. I’m not 100 per cent sure that this still stacks up, because one big challenge to the whole Enlightenment process is the rise of Asia over the last 50-60 years.