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On 12 October 1940, the 448th anniversary of Columbus’s discovery of the New World, the US President, Franklin D. Roosevelt, delivered a radio address in Dayton, Ohio, entitled the ‘Address on Hemisphere Defence’. 1 This speech was made at a critical juncture during World War II, as Nazi Germany had recently conquered much of Western Europe, and Britain stood largely alone against the Axis powers. The US, while officially neutral, was increasingly concerned about the risk of being drawn into the war if, for example, it came under pressure to send supplies to Britain and its shipping therefore came under attack from the Axis powers. Moreover, it was grappling with the tension between the recognition of this threat on the one hand, and isolationist sentiments on the other. The purpose of the speech was therefore to balance the nation’s desire for peace with the practical need for rearmament: to reassure the public by making the case that ‘the strongest reason for [arming] is that it is the strongest guarantee for peace’. However, what the speech is perhaps most widely remembered for is the President’s moving assertion that ‘we have always held to the hope, the belief, the conviction that there is a better life, a better world, beyond the horizon’.

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The term ‘economic globalization’ refers to the increasing integration of the world’s economies. In the context of scholarly discussions of globalization, this can refer to one or the other of two phenomena. That is, on the one hand, it is sometimes used to draw attention to the growing volume of economic exchanges between countries as measured by trade-to-gross domestic product (GDP) ratios, or by the value of imports and exports as a percentage of GDP. On the other hand, it is sometimes used to refer to the idea that, not only are countries trading with each other more, but an increasing proportion of this trade has the following characteristics. It takes place within firms, between branches located in different countries, and/or it is represented by the component parts of finished products and by the services required to produce such products, rather than by the finished products themselves.

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From the 15th century, during what is commonly called the Age of Discovery or the Age of Exploration, the world started to become a single entity in the awareness of its inhabitants when they came into contact with one another. 1 True, groups living at greater or lesser distances had come into contact before then. For example, the Silk Road (established during the Han Dynasty of China around the second century BCE) had long connected Asia, the Middle East and Europe, thereby facilitating the exchange of goods, ideas and cultures. However, the Age of Exploration marked the first time that truly global networks of trade and communication were established, bringing distant continents into sustained interaction. In doing so, it laid the groundwork for the modern, interconnected world by dramatically expanding the scope and intensity of cross-cultural exchange.

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This chapter begins precisely where the last one left off. The Industrial Revolution took place following what at the end of Chapter 2 we saw was the phase during which Europe began to move decisively ahead of Asia in terms of income per person, a point in history which economic historians refer to as ‘the Great Divergence’ (Pomeranz, 2000; Broadberry, 2021; Goldstone, 2021).

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The period from the end of the World War I to the beginning of World War II was a very distinctive one insofar as the history of economic globalization is concerned. Prior to 1914, in the early 20th century, international trade, capital flows and migration had reached unprecedented levels, facilitated by the technological advances of the so-called second Industrial Revolution (see below) and underpinned by the gold standard, providing stability in exchange rates, and by open borders and free trade policies. The interwar period, in contrast, witnessed a significant reversal of globalization in that there was a dramatic collapse in world trade and a reduction in international financial flows and in migration. These problems were all exacerbated by a tendency of countries to abandon or weaken the gold standard and to abandon free trade policies in favour of high tariffs, quotas and trade barriers, which disrupted global trading patterns.

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During the period that followed the end of World War II, in 1945, policymakers sought to establish nothing less than a new global economic and therefore political order. This was to be one that, in the words of Peter Sutherland, erstwhile European commissioner and World Trade Organization (WTO) director-general, ‘largely eliminated commercial ambition as a cause of war’, thereby ensuring that ‘businesspeople conquer markets, not navies’ (quoted in Blutstein, 2016: 150). Six institutions were established to try to achieve this. They included the United Nations (UN), the Bretton Woods system of monetary management, the International Monetary Fund (IMF), the World Bank, the General Agreement on Tariffs and Trade (GATT), and the European Economic Community (EEC). Together they helped to sustain what, as we discussed in the last chapter, was the second era of globalization that lasted until 1971. The temporal focus of this chapter is therefore the 30-year period from 1945 to 1975 that is often referred to in French as les Trente Glorieuses (the Glorious Thirty) in reference to the unprecedented rates of economic growth experienced in countries that sought to rebuild after the war, benefiting from high productivity, high levels of consumption and highly developed welfare states. The fundamental question driving our discussion is, ‘What contribution, if any, did each of the institutions make to the establishment of the new, more effectively integrated, world order their architects sought to achieve?’

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In discussions of the history of globalization, it is common, as we have mentioned earlier, to distinguish between different historical phases of the phenomenon. Thus, Friedman (2005) argues that it is possible to distinguish between a first era that lasted from 1492 to 1800 when countries globalized, a second era from 1800 to 2000 when companies globalized, and a third era from 2000 to the present day, during which time individuals have been globalizing – meaning, essentially, that thanks to the development of information and communication technology (ICT), individuals’ life chances are decreasingly tied to their geographical location: Only 30 years ago, if you had a choice of being born a B student in Boston or a genius in Bangalore or Beijing, you probably would have chosen Boston, because a genius in Beijing or Bangalore could not really take advantage of his or her talent. They could not plug and play globally. Not anymore. Not when the world is flat, and anyone with smarts, access to Google and a cheap wireless laptop can join the innovation fray. Other authors have chosen to divide time differently, depending on their conceptualization of the process of change and its drivers. For example, Scholte, defining ‘globalization’ as the spread of transplanetary relations between people – ‘social links between people located at points anywhere on the earth’ (2008: 1479) such that the global field becomes a space in its own right – asserts that these relations have become ‘denser’ with the passage of time, and divides the history of globalization on that basis. Consequently, he regards the most recent period to have begun around 1950, when, he argues, transplanetary relations, crucially, started to acquire the qualities of ‘transworld simultaneity (that is, they extend anywhere across the planet at the same time) and transworld instantaneity (that is, they move anywhere on the planet in no time)’ (Scholte, 2008: 1480, emphasis in the original). Up until that point, there had been an increasing compression of time relative to territorial space; since then, social relations have increasingly developed beyond that space.

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When searching for clues as to likely or possible futures, it makes sense to look at the past. Doing so enables us to identify relations of cause and effect and often reveals recurring dynamics (such as financial crises following speculative bubbles), thereby helping us to anticipate similar outcomes in similar conditions. For example, given the role of deregulation in the 2008 financial crash, it has often been said (see, e.g., Michie, 2022) that the failure since then to take robust steps to re-regulate financial markets makes it probable that a similar crisis will happen again in the not-too-distant future. The past sometimes furnishes us with examples of innovative responses to challenges (such as Roosevelt’s ‘New Deal’ in the face of the Great Recession), not to mention warnings (for example in the area of environmental degradation) facilitating the formulation of effective policies to address similar issues in the present. Finally, looking at the past reveals norms, values and patterns of behaviour that we might reasonably anticipate extending into the future if, for example, we have good reason to think that they are subject to phenomena such as path dependency, 1 say.

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Globalization is often thought of as a process whereby policymakers at the national level have become subject to ever-tighter constraints on what they are able to do – although the suggestion is not uncontested. As Sørensen (2014: 408) points out, some scholars (e.g. Julius, 1997; Ohmae, 1993; Naisbitt, 1994; Strange, 1996) argue that globalization has significantly eroded the power of states, while others (e.g. Weiss, 1998; Gilpin, 2002; Kapstein, 1993) deny this.