times. The looming disaster of the Great War and the subsequent collapse of the international economic order were impossible to imagine. A major conflagration was clearly in nobody’s interest: war simply couldn’t happen. Meanwhile, markets were able to function unimpeded for the most part by the actions of nations.
Keynes’s description reflected a model of globalization linked to empire, ideas, technology and cross-border mobility of both labour and capital. By the end of the nineteenth century, Britain had an empire covering a third of the Earth’s land mass. Other European nations, notably France and Russia, also built up sizeable empires. Europe’s overall control of the Earth’s surface rose from 37 per cent in 1800 to 67 per cent in 1878 and 84 per cent by 1914. 9 Critically, by the mid-nineteenth century Britain had become the philosophical and practical cheerleader for free trade. The Royal Navy ruled the high seas, acting as a global policeman either to enforce liberal trade or to impose Britain’s sovereign power over others. 10 The Royal Navy generally succeeded in keeping international trade afloat, bringing benefits to trading nations all over the world (it acted as a gunboat version of today’s World Trade Organization).
Meanwhile, the Industrial Revolution was in full flow, with canals, steamships and railways all contributing to a remarkable reduction in transportation costs, while the laying of telegraph cables – the firsttransatlantic success was in 1866 – marked the beginnings of an information technology revolution which that was to become a defining feature of the late twentieth century. Labour easily moved across countries, continents and oceans, often in search of empty yet potentially productive lands. Capital also moved around with remarkable ease. According to Maurice Obstfeld and Alan Taylor, the stock of foreign investment (investment made by people outside their home country) rose from 7 per cent of world GDP in 1870 to nearly 20 per cent by 1914, a figure not surpassed until the early 1980s. 11 Moreover, before the First World War, a big element of cross-border investment went from the developed nations to what we now label emerging markets. And people lived in a world of ‘small government’. In nominal terms, government spending in 1913 amounted to just over 13 per cent of GDP in the UK, 8.9 per cent in France, 13.3 per cent in Germany and 8.0 per cent in the US. Market forces truly dominated.
ECONOMIC INTEGRATION, POLITICAL PROLIFERATION
Globalization in the nineteenth century ultimately depended on the redrawing of the political map of Europe (and, by extension, other parts of the world) by a group of great men representing the Great Powers. International relations in the nineteenth century were shaped by the Congress of Vienna in 1815 (following the Napoleonic Wars), at which Europe was divided into spheres of influence, primarily reflecting the interests of the victorious Great Powers – the UK, Austria, Russia and Prussia (although, even after Napoleon’s departure following mounting defeats, France somehow still managed to get a seat at the table through the efforts of Charles-Maurice de Talleyrand, Louis XVIII’s envoy, who used his wily diplomatic skills to create friction between the victors). The voices of the people went unheeded and unheard. This was a world of empires and imperfect suffrage.
Under the influence of self-determination, sponsored by an increasingly powerful US hostile to colonial influence, the empires of the nineteenth century collapsed in the wars and economic crises that followed. The biggest casualty, most obviously, was the British Empire. The Ottoman Empire went the same way and, with the fall of the Berlin Wall in 1989, so did the Soviet Union’s twentieth-century empire. The result was a huge proliferation of nation states. According to Freedom House, there were only fifty-five sovereign countries in 1900, alongside thirteen empires.
Keynes’s description reflected a model of globalization linked to empire, ideas, technology and cross-border mobility of both labour and capital. By the end of the nineteenth century, Britain had an empire covering a third of the Earth’s land mass. Other European nations, notably France and Russia, also built up sizeable empires. Europe’s overall control of the Earth’s surface rose from 37 per cent in 1800 to 67 per cent in 1878 and 84 per cent by 1914. 9 Critically, by the mid-nineteenth century Britain had become the philosophical and practical cheerleader for free trade. The Royal Navy ruled the high seas, acting as a global policeman either to enforce liberal trade or to impose Britain’s sovereign power over others. 10 The Royal Navy generally succeeded in keeping international trade afloat, bringing benefits to trading nations all over the world (it acted as a gunboat version of today’s World Trade Organization).
Meanwhile, the Industrial Revolution was in full flow, with canals, steamships and railways all contributing to a remarkable reduction in transportation costs, while the laying of telegraph cables – the firsttransatlantic success was in 1866 – marked the beginnings of an information technology revolution which that was to become a defining feature of the late twentieth century. Labour easily moved across countries, continents and oceans, often in search of empty yet potentially productive lands. Capital also moved around with remarkable ease. According to Maurice Obstfeld and Alan Taylor, the stock of foreign investment (investment made by people outside their home country) rose from 7 per cent of world GDP in 1870 to nearly 20 per cent by 1914, a figure not surpassed until the early 1980s. 11 Moreover, before the First World War, a big element of cross-border investment went from the developed nations to what we now label emerging markets. And people lived in a world of ‘small government’. In nominal terms, government spending in 1913 amounted to just over 13 per cent of GDP in the UK, 8.9 per cent in France, 13.3 per cent in Germany and 8.0 per cent in the US. Market forces truly dominated.
ECONOMIC INTEGRATION, POLITICAL PROLIFERATION
Globalization in the nineteenth century ultimately depended on the redrawing of the political map of Europe (and, by extension, other parts of the world) by a group of great men representing the Great Powers. International relations in the nineteenth century were shaped by the Congress of Vienna in 1815 (following the Napoleonic Wars), at which Europe was divided into spheres of influence, primarily reflecting the interests of the victorious Great Powers – the UK, Austria, Russia and Prussia (although, even after Napoleon’s departure following mounting defeats, France somehow still managed to get a seat at the table through the efforts of Charles-Maurice de Talleyrand, Louis XVIII’s envoy, who used his wily diplomatic skills to create friction between the victors). The voices of the people went unheeded and unheard. This was a world of empires and imperfect suffrage.
Under the influence of self-determination, sponsored by an increasingly powerful US hostile to colonial influence, the empires of the nineteenth century collapsed in the wars and economic crises that followed. The biggest casualty, most obviously, was the British Empire. The Ottoman Empire went the same way and, with the fall of the Berlin Wall in 1989, so did the Soviet Union’s twentieth-century empire. The result was a huge proliferation of nation states. According to Freedom House, there were only fifty-five sovereign countries in 1900, alongside thirteen empires.
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