Globalization in Historical Perspective

Abstract

Together with the Internet, globalization has become the symbol of economic life in the 1990s, to the extent that both have become cliches in public discourse; but while the Internet is indisputably new, globalization has been an ongoing process for centuries. Indeed, as this chapter will show, globalization was further advanced along some (but by no means all) dimensions in the late 19^th century than it is today. Further, while pundits, now as then, have tended to extrapolate the immediate past into the indefinite future, and have predicted the ever-increasing integration of the international economy, history shows that globalization can be reversed. All economic change produces losers as well as winners, and if the losers are not adequately compensated, and are sufficiently powerful politically, then they may use the political process to undo those changes which they dislike most. This is not just a theoretical concern. While the First World War was undoubtedly the key force dissolving the economic relationships which had linked nations and continents in the decades since 1850, a retreat from liberal economic policies had already begun, certainly by the 1880s or 1890s. This retreat can be clearly linked to the distributional consequences of globalization, at least in the cases of commodity trade (O’Rourke (1997); O’Rourke and Williamson (1999), Chapter 6) and labor migration (Timmer and Williamson (1998); O’Rourke and Williamson (1999), Chapter 10).

This paper draws heavily on a recent collaboration with Jeffrey Williamson, Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy (MIT Press, 1999), and summarizes many of the arguments therein. I am grateful to Williamson for allowing me to make use of our shared work, and for many helpful conversations over the years.