Princeton University

In 2001 you published a book with a provocative title, The End of Globalization. First, what is “globalization”?

People define the term differently according to where they’re coming from. For me as an economic historian, “globalization” refers to the movement of goods, labor, capital, and ideas across national borders. The term is usually applied only to very recent history, although I and others have tried to suggest that there were earlier waves of globalization, the best known of which began in the late 19th century and ended with World War I and the Great Depression. And it seems to me that there were still earlier waves of increased integration, which were followed by periods during which integration was rejected.

What is the book about?

The book is about the disintegration of this earlier wave of globalization with the Great Depression and World War I. My argument is that the movement away from global integration that took place during these years had long-lasting psychological and political consequences. People began to think about economics less in international terms and more in terms of the nation-state. The overall result was a refocusing of attention on the nation-state. The question I ask in the book is whether this kind of reaction could happen again. I argue that it could.

So there was a basic connection between this period of globalization and the Great Depression?

Yes: the Great Depression was the end of it. All of the elements associated with globalization were already subject to controls before the Depression. Governments put in place protective tariffs, for instance the Hawley-Smoot Tariff Act, which was passed in the United States in 1930. New restrictions on the movement of people and capital were imposed during the period. One of my interests in writing the book was to emphasize the global character of the Great Depression. Many historians treat the Depression as an American phenomenon. There is a reluctance to consider the international ramifications of the Depression, and also the ways in which depressions and crises as in one country can have knock-on effects in other countries.

Is globalization a good thing?

I think globalization is on the whole a positive force; it has made people throughout the world better off, and in particular it works greatly to the benefit of people in developing countries. But globalization is also clearly a source of anxiety and angst, especially in the industrialized world. Think back to the opposition to NAFTA, or the violent protests in Seattle in 1999 against the WTO. Today there is a feeling in this country that jobs are being lost in manufacturing and services because of competition, respectively, with China and India.

It has been said that globalization is “inevitable and irreversible.”

That belief is something I have wanted to warn against in my work. Globalization certainly is not inevitable; it has been reversed in the past. I think the reversibility of globalization is something to be worried about and afraid of, not something to be promoted. Previous episodes of globalization have all ended with wars and depressions.

Several years ago you published an article that began, “The risk of a new Great Depression is greater now than at any time in the last 20 years.” Do you still believe that?

I do. We’re heaping up risk in ways we don’t quite understand. In particular, banks have been very successful at transferring risk off their balance sheets. I don’t think we really understand how risk would be distributed in the event of a major crash, so I don’t think we understand the vulnerabilities of the international financial system. I am also very worried about the threat of a backlash against trade liberalization.

What are the lessons of the Great Depression?

One important lesson is that when states try to advance national prosperity at the expense of international integration--when states try to “go it alone,” and do well at the expense of other states--their policies are generally not successful and they end up undermining their own stability, as well as that of other countries.

What threatens the global order now?

There are two obvious threats. One is a reversal of the move that we’ve seen over the last 50 years toward trade liberalization. Think of the responses we’ve seen to China’s emergence as a great economic power; many in Europe and the United States are suggesting that China is competing unfairly, and that Chinese products need to be reduced in European and American markets. The second threat, in my view, is contagious financial instability and panic. In the past this has been a way in which the global system has started to disintegrate.

Your most recent book is Europe Reborn: A History, 1914-2000 (2003). What led you to write on this topic?

Oddly enough there wasn’t a good overview history of 20th-century Europe. There were textbooks that covered the events without offering an overall view; and there were essayistic works that tried to put a shape on the century as a whole but left out a great deal. I wanted to write a book with a clear argument, and I also wanted to look at what was going on in Portugal and Bulgaria and Romania--not just in Germany and France.

What are the outlines of the story?

The story I tell is the decline and collapse of Europe, followed by the rebirth and rise of Europe. Most people focus on the first half of the 20th century, because it’s so spectacularly terrible and tragic. I also wanted to tell the story of how Europe recovers. A main theme of the book is convergence. In particular, I wanted to challenge the standard view that Eastern and Western Europe had followed very separate paths. It seemed to me that, right through the century, there were commonalities and features that constituted something like a sense of Europe. I also wanted to show how quickly Eastern and Western Europe have been converging since 1989--in terms of political systems, economic systems, demographic behavior, and attitudes.

Will you hazard a guess about the role of Europe in the 21st century?

At the moment I’m not very optimistic. In a sense, the Europe you see at the end of the 20th century is quite close to the Europe you saw in 1914. It seems to me that political instability is on the rise again and one hears the same kinds of reactions against the international order. Today there is more political extremism in Europe, both right-wing and left-wing, than there was during the bulk of the second half of the 20th century. Europe faces a colossal demographic problem: there aren’t enough young Italians and Germans and Spaniards to support the needs of their societies, particularly with respect to retirement and health care for the elderly. These problems really can’t be solved without substantial immigration of young people from other countries--yet immigration touches off all kinds of sensibilities in Europe and is one of the things that provokes backlash against modern development.

What did 9/11 show about the international order?

It showed very graphically how interconnected and interdependent problems have become. Problems like terrorism and infectious disease can no longer be confined to one country. That sense of interconnectedness is exactly what then pushes people to decide that they need to be more secure and they need to create barriers against the outside world. All the things that make the globalized world possible--the flows of goods and people and capital--all of these things can be abused. In the aftermath of 9/11, there was a powerful reflex response to restrict these movements. For instance, foreigners in the United States may be a security problem, so the whole visa regime is made much more restrictive. The enormous numbers of freight containers passing uninspected through United States ports now present an obvious terrorist threat, so one wants to somehow control or restrict or investigate these containers more. International terrorism requires the international flow of money, so naturally there are moves to restrict that. All the aspects of integration get turned into problems. And as in the past, it seems to me, people who are afraid of globalization are able to use security fears to curtail it.