Globalization and Its Nuances

The PBS TV program History Detectives had an episode entitled “Atocha Spanish Silver” where the wreck of the Spanish ship Atocha was described like this:

“In 1985, one of the greatest treasure discoveries was made off the Florida Keys, when the wreck of the Spanish ship Atocha was found. On board were some forty tons of silver and gold, which in 1622 had been heading from the New World to the Spanish treasury as the means to fund the Thirty Years’ War.”

Is this an obvious case of globalization? What about Marco Polo? RomeHan dynasty China trade in silks? Silk Road and Samarkand? Colombus? Magellan? Vasco da Gama?

All of these cases constitute a kind of harmless kind of “pop globalization” based on exotic voyages and travels.

Consider another such example, perhaps more academic:

“About the middle of the sixteenth century Antwerp reached its apogee. For the first time in history there existed both a European and a world market; the economies of different parts of Europe had become interdependent and were linked through the Antwerp market, not only with each other but also with the economies of large parts of the rest of the world. Perhaps no other city has ever again played such a dominant role as did Antwerp in the second quarter of the sixteenth century.”

(Europe in the Sixteenth Century, Koenigsberger and Mosse, Holt Rinehart Publishers, 1968, page 50)

Debt repudiations in several places in the 1550s are described like this:

“This caused the first big international bank crash, for the Antwerp bankers now could not meet their own obligations.”

(Europe in the Sixteenth Century, Koenigsberger and Mosse, Holt Rinehart Publishers, 1968, page 51)

This sounds like some kind of identifiably global period.

Actually, modern historians define globalization as “price convergence” (i.e., wheat has now a unified “world price,” implying a world market). This rigorous definition is confirmed by and also shows up in the data in the 1820s and may or may not be prefigured by all the Marco Polo and Atocha silver stories, mentioned above.

These episodes in history are not there yet.

One sees wheat prices and other commodity prices converging in the 1820s and thereafter based on railroads, steamships and telegrams.

The classic in this kind of analysis is:

Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy, by Kevin O’Rourke and Jeffrey Williamson.

Kevin O’Rourke and Jeffrey Williamson present a coherent picture of In Globalization and History, Kevin O’Rourke and Jeffrey Williamson present a coherent picture of trade, migration, and international capital flows in the Atlantic economy in the century prior to 1914—the first great globalization boom, which anticipated the experience of the last fifty years. The authors estimate the extent of globalization and its impact on the participating countries, and discuss the political reactions that it provoked. The book’s originality lies in its application of the tools of open-economy economics to this critical historical period—differentiating it from most previous work, which has been based on closed-economy or single-sector models. The authors also keep a close eye on globalization debates of the 1990s, using history to inform the present and vice versa. The book brings together research conducted by the authors over the past decade—work that has profoundly influenced how economic history is now written and that has found audiences in economics and history, as well as in the popular press.

(book summary)

In everyday language, we associate the word globalization with some ever-increasing Marco Polo phenomena. While that’s not entirely wrong, globalization in the more technical sense begins to show up in the data only from the 1820s. At this point, we begin to see the convergence of worldwide wheat prices, for example. This makes the world, for the first time, a global “store” with unified prices. Here is the technical beginning of globalization. The years 1870-1914 are subsequently the first real era of modern globalization and represent a kind of “take-off” from the first stirrings of the 1820s. World Wars I & II might be seen as globalization backlash.

At this moment in world history, whether Putin’s invasion of Ukraine will constitute a new wave of deglobalization remains to be seen.

Essay 33: How to Jump From a Field to a Larger Understanding: The Example of Globalization

In a university, one is trained to “inspect” fields. That produces what might be called a “monographic” intelligence.

Our purpose is to show and promote something ancillary to this, what might be called a “circum-spective” intelligence (i.e., using the specialized knowledge as one “brick” in a larger structure of understanding).

Let’s do an example:

Think of all the descriptions and analyses of something called globalization. An objective evaluation of the literature on this show two analyses that stand out and tower above the rest:

  1. Prof. Jeffrey Williamson and Kevin O’Rourke, Globalization and History, MIT, 1999 (this is a “quantitative history” or “cliometric” study and a classic).
  2. Elhanan Helpman, Understanding Global Trade, Harvard, 2011 (a masterpiece of trade-based analysis)

Both of these authors are Harvard professors in economics and deserve the high regard that such books have won them. In these two books, there are several technical disagreements of which the deepest is that Williamson focuses on the emergence of one world market price (say for wheat) and argues that this “price convergence” is the best measure of globalization. Thus at a certain point wheat of a certain kind (hard, durum, etc.) was price at the same world rate whether the wheat came from Kansas, Canada, Argentina or Ukraine. The world is then a global price-making market mechanism. This price convergence then extends to their kinds of prices as globalization processes deepen. Williamson explicitly considers other approaches to globalization such as trade share of GDP as confusing.

Helpman, on the other hand, uses export plus imports/over GDP as his measure, clearly disagreeing with the Williamson approach of prices and not trade shares.

Interestingly, both scholars conclude that something we call globalization begins to “show up in the data” in the 1820s. Thus, Marco Polo-type stories are colorful and “multinational” but have little to do with actual (i.e., data based) globalization as we see it, looking backwards from 2020.

Both of these books are classic works and show the intricacies and utility of the “cliometric” approach (i.e., explaining the past quantitatively, using data from economics).

However, there’s a deep perspectival omission in both works:

As the novels of Balzac (1799-1850) show there begins to “co-evolve” with this globalization story a parallel story of global colonization and empire-building by the European powers. Algeria is seized in 1830 and culminates in the brutal Algerian War of 1954-1962. Without de Gaulle‘s supreme prestige as the savior of France, the French would have gone to a destructive civil war and the defeat in French Indochina at Dien Ben Phu. 1954 almost lead to endless strife based on events on the other side of the world.  Balzac’s novels are often set in the 1820s and mention a deepening involvement of France with North African empire-building.

This culminates in Maupassant’s novel Bel-Ami from 1885, which centers on the inexorable rise of an unethical “manipulation machine,” who returns from North Africa as a penniless soldier and after many twists and turns makes several killings in North Africa in various shady schemes which he gets wind off via his journalism contacts.  In other words, the rise of Western industrial technology (from railroads to cars to planes) conquers the world one way while the European colonial armies conquer the world another way.

The peoples like the Vietnamese and Algerians “see” the world in colonial terms with colonialism backstopped by industrial technology. Their quest for dignity begins with this analysis and not with the analysis which says industry and science are primary and colonialism a footnote.

It is this fundamental clash of historical interpretations on a worldwide scale which bedevils the changing relationship between the West and the non-West and is more profound than the econometric differences between a Prof. Williamson and a Professor Helpman.

By seeing how these layers and stories are “entwined” gives you a deeper and wide-angle vision which one field—economics or cliometrics—can’t offer because it is one brick or building block in a larger story. Fields have to be “opened up” in this way, which is the mission of this book.