Letters: Flat World Hits a Bump

Economic historian Harold James says Moisés Naím is too optimistic about the future of globalization, while Karl Moore and David Lewis argue that global trade is nothing new.

Moisés Naím ("Think Again: Globalization," March/April 2009) thinks my recent obituary for financially driven globalization in Current History was, much like the announcement of Mark Twain’s death in 1897, premature. Twain didn’t die until 1910, of course, but he certainly wasn’t immortal. Neither is globalization. Naím is absolutely right in pointing out that globalization is a highly dynamic process and also that it has produced tremendous benefits in terms of poverty reduction in many countries. But historically, globalization — a cyclical phenomenon — is vulnerable to terrible and costly backlashes.

Because so much recent globalization was driven by financial flows, the financial meltdown is a very serious setback. Necessary state rescues of entire banking systems will inevitably produce different financial systems. For example, Italian taxpayers will not want their money used to bail out remote Eastern European debtors. The same is true for stimulus packages — countries will not want to see foreign producers benefiting. So far, attempts to solve the banking and fiscal problems at an international rather than national level have been fiascoes.

The reactions against globalization are as much driven by a new psychology as by economic reality. Crises give rise to conspiracy theories, often directed against foreigners or foreign countries. Many in the United States argue that Chinese surpluses caused this mess, while many in other countries are already arguing that they’re being hit by an American crisis. We will see the emergence of not just small measures of trade protectionism but massive and powerful xenophobic sentiments. It may also be that many former so-called "globalization critics" will finally see just how good we had it, when the entire system begins to fall apart.

–Harold James
Professor of History and International Affairs
Princeton University
Princeton, N.J.

In the section of his article titled "Globalization Is Nothing New," Moisés Naím correctly argues that the post-1985 integration of the world is qualitatively as well as quantitatively different from its forerunners: the British global economy of the 19th century and the Spanish/Portuguese global economy of the 16th. It is far more instantaneous and entrepreneurial.

But the current wave of globalization does have an important forerunner in the ancient world. In our new book, The Origins of Globalization, we argue that a primitive version of globalization, which one could call "hemispherization," existed between roughly 100 BCE and 200 CE. If today’s global economy could be likened to an eight-lane superhighway joining the regions of the world, the hemispheric economy connecting the Roman Empire, Parthia, India, and Han China resembled a caravan trail. Nevertheless, it thinly linked the regions of the known world.

We recognize that in ancient times, the impact of long-distance trade was only skin deep and most trade was in luxury goods while today, the Internet allows billions of transactions among billions of people for very specific individual needs. But there are important parallels between hemispherization and the current postmodern wave of globalization. For instance, within the ancient hemispheric economy, powerful regional trade blocs concentrated, such as the Roman and Han empires and the Indian subcontinent. Likewise, today most trade occurs within regional blocs like the EU, NAFTA, and the Pacific Rim.

When the Han and Roman empires began to totter, India, East Africa, and the Islamic world maintained global trading links that revived the hemispheric economy in medieval times. Similarly, we believe Naím is correct in his central argument that the current wave will not be shattered by a severe recession or even a global economic meltdown.

–Karl Moore
Desautels Faculty of Management
McGill University
Montreal, Canada

–David Lewis
Professor of History
Citrus College
Glendora, Calif.

Moisés Naím replies:

One of the central messages of my article is that international integration transcends economics. Trade and investment flows are important dimensions of globalization but not the only ones: Politicians and bureaucrats, terrorist organizations and religious communities, hobbyists and criminals are just a few examples of groups that are better equipped now than ever to operate internationally, cheaply, and effectively. This kind of globalization will not be deeply or permanently affected by the economic downturn, and indeed some of these activities — transnational crime, for example — will thrive thanks to the bad economy.

Harold James is correct in thinking that economic globalization will be curtailed by the current crash. Trade and investment flows are plummeting, trade barriers are surfacing, and one of the collateral damages of bank nationalizations and bailouts is financial protectionism. Sadly, as he writes, the crisis is also fueling xenophobia and populism.

But I disagree with his claim that globalization is cyclical. Surely, global integration ebbs and flows: Economic crashes, wars, and pandemics inhibit cross-border interactions, and then peace, economic growth, and technological innovation re-energize and restore them. Yet, when one takes a longer historical view, it seems clear that while the integration of human communities has had peaks and valleys, the more permanent trend is one of continuous ascent. In the long run there is always more globalization, not less.

This is a point that clearly comes across in Karl Moore and David Lewis’s letter and their fascinating example of the parallels between the current wave of globalization and the economic integration of 2,000 years ago. Their comparison of the "hemispherization" that prevailed at the time and the current wave of globalization is a very useful one. The forces that hindered cross-border contacts and international integration back then were eventually overcome by new technologies and the human instincts to travel, explore, trade, and engage with new peoples. The same will happen now.

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