A new book about the Great Depression claims that what made the Great Depression "great" was globalization, which allowed financial crises to be transmitted across boarders, and nationalistic responses which shut down free trade.
The end of globalisation. Lessons from the Great Depression. Written by Harold James, whose work on the German slump is outstanding. He's an absolutely top notch historian.
news.ft.com
>>Fiscal and financial crises reinforced each other and were transmitted across borders like a plague. Most governments reacted to declining prices and economic activity with attempts to balance budgets, reinforcing a growing deflationary weakness in the global economy.
High-mindedness about free trade quickly collapsed under the pressure and, in spite of serious attempts to prevent it, the world slid into a vicious period of protectionism, with trade diplomacy - where it existed - being increasingly conducted on a bilateral basis.
Widespread efforts were made to impose labour standards to counteract "unfair" competition, and restraints were placed on migration, first across the Atlantic and then within Europe.
A conventional wisdom quickly emerged in response to the problems of the global economy. "Everything that was moving across national boundaries - whether capital, goods, or people - really had no business to be doing that and should be stopped. If it could not be stopped, it should be controlled, in accordance with a definition of national interest."
Prof James' central argument is that "globalism fails because humans and the institutions they create cannot adequately handle the psychological and institutional consequences of the interconnected world". Institutions that were developed to make globalisation possible cracked under the strain and became the channels of their own destruction.<<
As Kyros noted earlier, fascism is a reaction to deflation - it took me a while to think that through, but I did it this morning. Now this afternoon I am seeing the argument made again by a really good historian. Kind of eerie.
Communism is international socialism. Fascism is national socialism. The borders are closed, but within the borders, the government interferes with all aspects of economic life.
But wait! There's an antidote! Electronic money knows no borders, and doesn't have any politician's face stamped on it. Can the Internet save us from ourselves?
Or will the divide between those who use electronic money and those who use the paper that has politicians' faces printed on it just widen? Are there more of us or more of them? |
