Top positive review
Harold Vasquez's review of Global Capitalism
Reviewed in the United States on September 28, 2015
New York: W.W. Norton & Company, 2006, 556 pp.
Global Capitalism is a great comprehensive history of the capitalism system from its early foundations, before the 1900s, until the end of the twenty century. With its subtitle, “Its fall and rise in the twentieth century”, the author does not only attempt to describe the pattern followed by international markets, investments, and global trade during the last century, but also the changes on social movements, political ideologies, and economic power across the world. More specifically, Frieden describes the factors that determined the high level of globalization and integration in the capital markets during the late 19th century, how this economic framework evolved to an almost completed closeness of international trade after 1914, and finally how international markets embrace again the hymn of liberalization and free trade after 1945, following the Breton Woods agreement.
To accomplish his objective, the author basically divides the history into four major economic periods –each period subsequently divided into five chapters. The first period, denominated “Last Best Years of the Golden Age, 1896-1914”, describes how the pressures from British manufactures made the United Kingdom, and the rest of the world thereafter, to favor free trade and economic liberalization, against the mercantilist economic policies that ruled the world from the 1800s. The adoption of the gold standard as a worldwide monetary system and the economic stability of this regime resulted in a significant increase in the level of openness and trade around the world. The second period, as its name indicates “Things Fall Apart, 1914-1939”, describes the reconstruction process of European economies after World War I, and how the United States emerged as a new world economic power. During this period, new industries and corporations emerged giving rise to worker unions, which later evolved into powerful labor movements. The economic depression, after 1929, resulted in the quest of new alternatives to the current economic environment, which ends with fascisms, communisms and dictatorships as the predominant ideas and government systems around the world. And, as the author said, here is when “Things Fall Apart”.
During the third period –“Together Again, 1939-1973”, European countries are in the needs of reconstruct their economies from the disasters of World War II. The United States embraced the role of rebuilding the European economies, and for the first time in history, the US economy became a net international lender to the rest of the world. However, the aid arrived with the commitment to a new economic order with a more open trade, and the gold-dollar fixed exchange rate regime. The fighting for the establishment of a new economic order bi-polarized the world into two major blocs: eastern or socialized economies, and western or capitalized economies. The agreements reached at the Bretton Woods treaty set the pillars for the new global economy. In addition, new international organizations with very significant roles in market economies emerged, such as the International Monetary Fund, the World Bank, the Organization for Economic Cooperation and Development (OECD), the General Agreement on Tariffs and Trade (GATT), between others. In spite of all this effort from industrialized economies promoting international markets and trade, not all market economies pursued this path. For instance, Latin American countries decided to stay isolated from the world economy adopting import-substituting industrialization (ISI) policies. This section finalized with “The End of Bretton Woods” –Chapter 155, basically due to the incapability of the US economy to defend the dollar against international speculators. The last section of the book describes the final three decades of the 20th century.
One of the main strengths of this book is the Frieden’s ability to incorporate international economic theory (for example, the Heckscher-Ohlin’s trade model) into a very simple and clear language for non-specialist in the economic science. In addition, the author carefully included the biography of the most influential individuals in the economic history of the 20th century, such as N. M Rothschild, John Maynard Keynes, Hjalmar Schacht, between others. The book is full of details, which could be attractive for those interested in history or political economy, but maybe not so for those in the economic field who are looking to understand the reality from the construction and application of analytical models.
Global Capitalism is an attempt to understand, from an economic and political perspective, how the world has evolved during the 20th century and how the capitalism has prevailed as the main economic framework in developed and non-developed economies, promoting economic stability and growth. The triumph of global capitalism with respect to other economic system does not imply that the system is perfect. As the author argued, the rise and fall of any economic system is strongly related with the discontents of the population, and any change in the political economy generates winners and losers. The recent political changes around the world of conservative parties to more social-democratic parties, especially in Latin American countries, might suggest further changes in the international economy during the 21st century.
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