Power and Plenty

In an interview 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. 

In an interview on Globalisation

The first book on your list is Power and Plenty by Ronald Findlay and Kevin H O’Rourke. Can you tell me a bit about it and why it’s on your list?

This is really a magisterial tour of the last thousand years of globalisation. It’s written by two economists who also happen to be superb historians, and they go back to the year 1000. For me two things about this book stand out. One is it’s a very valuable reminder that globalisation has a history. It’s a history that goes back not just to 1980, not just to 1945, not just to the so-called first era of globalisation of the 19th century – but all the way back to the Mongol conquests and the manner in which inter-continental networks of trade were spawned throughout history. In other words, globalisation is very old and has been with us for a very long time. The second useful thing that comes out of it, and in a way the main theme of the book, is that political power and economic globalisation have always been intertwined. Economists have a tendency to think of economic globalisation as something that emerges purely out of the instinct of humans to want to barter and exchange. What the book shows is that the ebb and flow of globalisation have been intimately linked with military conflict, with the rise of political power, with competition among the great powers. And we miss a lot of the picture if we don’t understand that behind economic globalisation of any kind is a certain structure of political power.

How is that knowledge useful to us today?

It helps us realise that each type of globalisation has to be backed by certain configurations of power. And, as those configurations change, we need to think about a somewhat different type of economic globalisation. So the immediate post-war period, the Bretton Woods period of economic globalisation, was underpinned by US political dominance in the world economy. The World Bank, the IMF, the GATT and WTO were made in the image of what the US wanted to construct. It was, fundamentally, an extension of US power, just as the 19th-century globalisation was an extension of British naval power and British imperialism. What that means, going forward, is that as the US power recedes and we go into a multi-polar global system, it renders fundamentally impossible the type of economic globalisation we’ve had in the past few decades. So we need to think of a new kind of globalisation that is going to be underpinned by a multi-polar system, a much more heterogeneous configuration of political power at the global level.

And does your own book offer some clues as to what that new system should look like?

Yes, I would hope so!