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When Globalization Fails: The Rise and Fall of Pax Americana
IS GLOBALIZATION AN UNINTENDED RECIPE FOR WAR? Taking this question as its starting point, James Macdonald's When Globalization Fails offers a rich, original account of war, peace, and trade in the twentieth century―and a cautionary tale for the twenty-first. In the late nineteenth century, liberals exulted that the spread of international commerce would usher in prosperity and peace. An era of economic interdependence, they believed, would render wars too costly to wage. But these dreams were dashed by the carnage of 1914–1918. Seeking the safety of economic self-sufficiency, nations turned first to protectionism and then to territorial expansion in the 1930s―leading again to devastating conflict. Following the Second World War, the globalists tried once more. With the communist bloc disconnected from the global economy, a new international order was created, buttressing free trade with the informal supremacy of the United States. But this benign period is coming to an end. According to Macdonald, the global commerce in goods is a mixed blessing. It makes nations wealthier, but also more vulnerable. And while economic interdependence pushes toward cooperation, the resulting sense of economic insecurity pulls in the opposite direction―toward repeated conflict. In Macdonald's telling, the First World War's naval blockades were as important as its trenches, and the Second World War can be understood as an inevitable struggle for vital raw materials in a world that had rejected free trade. Today China's economic and military expansion is undermining the Pax Americana that had kept economic insecurities at bay, threatening to resurrect the competitive multipolar world of the early twentieth century with all its attendant dangers. Expertly blending political and economic history and enlivened by vivid quotation, When Globalization Fails recasts what we know about the past and raises vital questions about the future.
320 pages, Hardcover
First published January 6, 2015
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January 25, 2015
By Edward Chancellor
Few doubt that international trade usually increases the wealth of nations. Does it also bring peace? Many think so, but economic historian James Macdonald points out in “When Globalization Fails: The Rise and Fall of Pax Americana” that the last high point of globalization ended just over a century ago in a devastating world war – between countries which were also each other’s largest trading partners.
New York Times columnist Thomas Friedman writes about the “Dell Theory of Conflict Prevention,” positing that no two countries that are part of a global supply chain have ever fought a war with each other. Macdonald decries such thinking as simplistic and unhistorical.
Nor is Friedman original. Victorian liberals such as Richard Cobden and John Stuart Mill had very similar ideas – Cobden going so far as to claim that free trade would “draw men together, thrusting aside the antagonism of race, and creed, and language, uniting us in the bonds of eternal peace.” Trade between countries, however, can lead to intense competition for raw materials, whilst also producing in some nations an acute sense of geostrategic vulnerability. Rather than bringing eternal peace, trade between nations may lead to war.
Conflict can be avoided, however, if trade falls under the protection of a benign global hegemon, such as Victorian Britain whose Royal Navy ruled the oceans for nearly a century after Napoleon’s downfall. Danger arises, however, when the supremacy of the dominant superpower is challenged.
At the turn of the 20th century Britain ceded economic primacy to the United States and Germany. Under Kaiser Wilhelm, the Germans became increasingly assertive. They hungered for the natural resources and prestige conferred by imperial possessions, whilst fearing that Britain’s continued naval dominance threatened Germany’s overseas trade. Admiral Tirpitz, head of the Kaiser’s navy, declared that a “state that has actively taken up trade… cannot exist without a certain measure of naval power, or else it must go under.”
The extensive trade among the Great Powers did not prevent a naval arms race. Colonial conflicts also became more frequent. Then came 1914. “If the liberals [such as Mill] had been right,” says Macdonald, “these countries should never have gone to war.”
World War One taught that economic interconnections created national vulnerability. Economic self-sufficiency was seen as a potential solution. Autarky appealed to military strategists in both Nazi Germany and Japan in the 1930s – and was even supported at the time by that economic weather vane, John Maynard Keynes.
Among the war aims of both Germany and Japan was a desire to establish self-sufficient economic blocks. Yet Japan’s moves to construct its so-called “Greater Asia Co-Prosperity Sphere” threatened U.S. supplies of rubber and tin, and after Japan moved military forces into Indochina, America restricted Japan’s oil supplies. The Japanese replied in turn by bombing Pearl Harbor. “When the overlay of racial barbarity is removed from the Second World War,” writes Macdonald, “what remains is a struggle for resources.”
During the Cold War, the superpowers’ scramble for resources became less intense. The Soviet Empire was both self-sufficient in raw materials and almost completely withdrawn from global trade. Meanwhile, trade in what came to be known as the free world fell under the protection of the dominant U.S. superpower.
America exercised its power during the post-war period, in Macdonald’s view, in an unthreatening manner to “protect its allies rather than its own narrow self-interest.” In this respect, Pax Americana was similar to the Pax Britannica that had prevailed in the middle decades of the 19th century.
The collapse of the Soviet Union and the dramatic rise of China in recent years have changed the geopolitical landscape. Since Deng Xiaoping’s reforms, China has developed a very open economy, with trade amounting to over 50 percent of GDP. Yet Beijing refuses to accept American military hegemony. The strategists of Wilhelmine Germany fretted about the Royal Navy’s control of the North Sea. Their contemporary Chinese counterparts are painfully aware that at any time the U.S. Navy can throttle China’s trade through the Malacca Straits.
In recent years, the Middle Kingdom has been building up its navy and lately become involved in a number of maritime territorial disputes with its neighbours. Japan, under nationalist Prime Minister Shinzo Abe, is seeking to strengthen its military capacity. An arms race in Asia threatens.
Beijing has also developed quasi-autarkic ambitions. China’s investment-driven economy cannot survive without imported raw materials. Its state-owned enterprises have sought, largely unsuccessfully, to acquire foreign supplies, with failed bids for the U.S. oil producer Unocal and the Anglo-Australian miner Rio Tinto. The same autarkic logic explains China Development Bank’s large loans to Venezuela and other countries collateralised with future supplies of oil.
Although China is a net importer of most raw materials, Beijing has used its dominant position as a supplier of rare earths for political ends. In 2009, as a dispute with Japan over the sovereignty of the Senkaku/Diaoyu islands flared up, China effectively banned the export of rare earths, a vital component for Japan’s electronics manufacturers.
The rise of China, in Macdonald’s view, threatens to undermine America’s global hegemony and bring to an end the Pax Americana. The parallels with the rise of Imperial Germany over a century ago are worrisome, to say the least. Meanwhile, the antics of Putin’s revanchist Russia suggest historical analogues of a 1930s vintage, as the UK’s Prince Charles has imprudently observed.
“When Globalization Fails” is a scholarly and readable account of how economic development and trade can exacerbate geopolitical tensions. It deserves to be read in the corridors of power, from Washington to Beijing. After all, the best hope of avoiding a repetition of past catastrophes lies in understanding how they came about.
Few doubt that international trade usually increases the wealth of nations. Does it also bring peace? Many think so, but economic historian James Macdonald points out in “When Globalization Fails: The Rise and Fall of Pax Americana” that the last high point of globalization ended just over a century ago in a devastating world war – between countries which were also each other’s largest trading partners.
New York Times columnist Thomas Friedman writes about the “Dell Theory of Conflict Prevention,” positing that no two countries that are part of a global supply chain have ever fought a war with each other. Macdonald decries such thinking as simplistic and unhistorical.
Nor is Friedman original. Victorian liberals such as Richard Cobden and John Stuart Mill had very similar ideas – Cobden going so far as to claim that free trade would “draw men together, thrusting aside the antagonism of race, and creed, and language, uniting us in the bonds of eternal peace.” Trade between countries, however, can lead to intense competition for raw materials, whilst also producing in some nations an acute sense of geostrategic vulnerability. Rather than bringing eternal peace, trade between nations may lead to war.
Conflict can be avoided, however, if trade falls under the protection of a benign global hegemon, such as Victorian Britain whose Royal Navy ruled the oceans for nearly a century after Napoleon’s downfall. Danger arises, however, when the supremacy of the dominant superpower is challenged.
At the turn of the 20th century Britain ceded economic primacy to the United States and Germany. Under Kaiser Wilhelm, the Germans became increasingly assertive. They hungered for the natural resources and prestige conferred by imperial possessions, whilst fearing that Britain’s continued naval dominance threatened Germany’s overseas trade. Admiral Tirpitz, head of the Kaiser’s navy, declared that a “state that has actively taken up trade… cannot exist without a certain measure of naval power, or else it must go under.”
The extensive trade among the Great Powers did not prevent a naval arms race. Colonial conflicts also became more frequent. Then came 1914. “If the liberals [such as Mill] had been right,” says Macdonald, “these countries should never have gone to war.”
World War One taught that economic interconnections created national vulnerability. Economic self-sufficiency was seen as a potential solution. Autarky appealed to military strategists in both Nazi Germany and Japan in the 1930s – and was even supported at the time by that economic weather vane, John Maynard Keynes.
Among the war aims of both Germany and Japan was a desire to establish self-sufficient economic blocks. Yet Japan’s moves to construct its so-called “Greater Asia Co-Prosperity Sphere” threatened U.S. supplies of rubber and tin, and after Japan moved military forces into Indochina, America restricted Japan’s oil supplies. The Japanese replied in turn by bombing Pearl Harbor. “When the overlay of racial barbarity is removed from the Second World War,” writes Macdonald, “what remains is a struggle for resources.”
During the Cold War, the superpowers’ scramble for resources became less intense. The Soviet Empire was both self-sufficient in raw materials and almost completely withdrawn from global trade. Meanwhile, trade in what came to be known as the free world fell under the protection of the dominant U.S. superpower.
America exercised its power during the post-war period, in Macdonald’s view, in an unthreatening manner to “protect its allies rather than its own narrow self-interest.” In this respect, Pax Americana was similar to the Pax Britannica that had prevailed in the middle decades of the 19th century.
The collapse of the Soviet Union and the dramatic rise of China in recent years have changed the geopolitical landscape. Since Deng Xiaoping’s reforms, China has developed a very open economy, with trade amounting to over 50 percent of GDP. Yet Beijing refuses to accept American military hegemony. The strategists of Wilhelmine Germany fretted about the Royal Navy’s control of the North Sea. Their contemporary Chinese counterparts are painfully aware that at any time the U.S. Navy can throttle China’s trade through the Malacca Straits.
In recent years, the Middle Kingdom has been building up its navy and lately become involved in a number of maritime territorial disputes with its neighbours. Japan, under nationalist Prime Minister Shinzo Abe, is seeking to strengthen its military capacity. An arms race in Asia threatens.
Beijing has also developed quasi-autarkic ambitions. China’s investment-driven economy cannot survive without imported raw materials. Its state-owned enterprises have sought, largely unsuccessfully, to acquire foreign supplies, with failed bids for the U.S. oil producer Unocal and the Anglo-Australian miner Rio Tinto. The same autarkic logic explains China Development Bank’s large loans to Venezuela and other countries collateralised with future supplies of oil.
Although China is a net importer of most raw materials, Beijing has used its dominant position as a supplier of rare earths for political ends. In 2009, as a dispute with Japan over the sovereignty of the Senkaku/Diaoyu islands flared up, China effectively banned the export of rare earths, a vital component for Japan’s electronics manufacturers.
The rise of China, in Macdonald’s view, threatens to undermine America’s global hegemony and bring to an end the Pax Americana. The parallels with the rise of Imperial Germany over a century ago are worrisome, to say the least. Meanwhile, the antics of Putin’s revanchist Russia suggest historical analogues of a 1930s vintage, as the UK’s Prince Charles has imprudently observed.
“When Globalization Fails” is a scholarly and readable account of how economic development and trade can exacerbate geopolitical tensions. It deserves to be read in the corridors of power, from Washington to Beijing. After all, the best hope of avoiding a repetition of past catastrophes lies in understanding how they came about.
September 26, 2016
James Macdonald's When Globalization Fails: The Rise and Fall of Pax Americana is a compelling, historical argument why trade does not bind nations together but may drive them further apart and into conflict, especially when confronted with a multipolar geopolitical environment.
There is reason to believe, according to the author, this is where we are now with a belligerent Russia, a China that has rejected the post-war Pax Americana, and the lack of alignment of a rising India: this rising multipolarity may not bode well for the near future. Putting this into the context of the South China Sea geopolitical conflict and threat to trade routes used by many nations in the world, especially East and South East Asia, then there are good reasons to be nervous.
The author does not argue war is inevitable but only that there are worrying signs and stressors that need to be dealt with before any clear road forward may be pursued.
If you throw into the mix, though Macdonald does not, the rise of international plutocracy and the hammering of the middle classes, the stagnation of wages over the past thirty years, and the erosion of representative democracy and freedom of speech the outlook appears to be increasingly bleak in the short-term.
This is not to suggest war, internal and external, is inevitable, only that it is increasingly possible.
Unless the issue of Pax Americana, wages, democracy, social mobility, and the obscene gap between the bottom 80% of the developed world and the top 20% (especially the top 1%) the outlook is as dangerous as the Political Economist Mark Blyth suggests it is when he says: “the Hamptons are not a defensible position”.
This is an excellent book looking at some serious stressors in the geopolitical environment today and the history of globalization.
A Must Read
Rating: 5 out of 5 Stars
There is reason to believe, according to the author, this is where we are now with a belligerent Russia, a China that has rejected the post-war Pax Americana, and the lack of alignment of a rising India: this rising multipolarity may not bode well for the near future. Putting this into the context of the South China Sea geopolitical conflict and threat to trade routes used by many nations in the world, especially East and South East Asia, then there are good reasons to be nervous.
The author does not argue war is inevitable but only that there are worrying signs and stressors that need to be dealt with before any clear road forward may be pursued.
If you throw into the mix, though Macdonald does not, the rise of international plutocracy and the hammering of the middle classes, the stagnation of wages over the past thirty years, and the erosion of representative democracy and freedom of speech the outlook appears to be increasingly bleak in the short-term.
This is not to suggest war, internal and external, is inevitable, only that it is increasingly possible.
Unless the issue of Pax Americana, wages, democracy, social mobility, and the obscene gap between the bottom 80% of the developed world and the top 20% (especially the top 1%) the outlook is as dangerous as the Political Economist Mark Blyth suggests it is when he says: “the Hamptons are not a defensible position”.
This is an excellent book looking at some serious stressors in the geopolitical environment today and the history of globalization.
A Must Read
Rating: 5 out of 5 Stars
November 22, 2015
An intriguing read that certainly expanded my horizons; I recommend it to all. The author describes global trade, or the lack of it, and how it relates to war and peace from the 19th century to present. One of the points is that economic security for one nation comes at the expense of another nation. With the rise of China and Russia, the author questions if the world can be kept from descending into competitive multipolarity which ultimately leads to conflict and war.
If you pick up this book based on the title, as I did, you can save yourself some time and skip to the last chapter since all previous chapters are the historical setting; only the last chapter deals with the title.
If you pick up this book based on the title, as I did, you can save yourself some time and skip to the last chapter since all previous chapters are the historical setting; only the last chapter deals with the title.
July 21, 2017
seriously....when one of the quite prominent Taiwanese philosopher was highly recommending this book on TV show, I was quite excited to read this book..but then...this book is a ship-whacked. A book about pretty much NOTHING...just a quick review of the WWI, WWII war history and why these countries raged war against each other: including cultural, political and economical aspect in WHICH mentioned by SO MANY authors...One of the best author about financial history should be Bill Engdahl..James is not even close in the ballpark..no point, no theme..I don't really know what his title is about especially the rise and fall of Pax Americana?? too much Americanism? too much urge and wishful thinking for American government to do much more to secure her supremacy? no suggestions, nothing...from my expertise, i can give the author a little cent: the way James described really depicting the world many wars are really raised by small batch of a-holes and evil got nothing to do politicians who are nothing but chasing for the good King Kong and realized the mess they left behind after Kong is dead...yes, James did amplify these morons..terrible book.......this book carries the same low level as authors who co-wrote: Why Nations Fail....
February 23, 2016
I've long felt that most of the ideological arguments we have - between countries and within our own society - are really just window dressing on the basic competition we as nations and tribes have for resources. MacDonald's book examines the history of world conflict since the 1800s (and delves into earlier epochs) and relates it to the perpetual needs of countries to feed themselves and prosper, and how they fall into conflict when they feel their access to the resources they need to meet those goals are threatened.
Colonialism, world wars, the Cold War, and the looming competition with China are all examined and seem to fit quite comfortably in MacDonald's unified theory of national self-interest. Although he doesn't delve into the culture wars or partisan divide in our own country - or into the internal conflicts of any of the societies that make up his story, his theories certainly seem to be extensible to them. Maybe that will be the subject of his next book...
Pax Americana is surely evolving into Pax Sin0-Americana, and how that transition is managed by both countries is going to be an interesting ride for everyone on the planet.
Colonialism, world wars, the Cold War, and the looming competition with China are all examined and seem to fit quite comfortably in MacDonald's unified theory of national self-interest. Although he doesn't delve into the culture wars or partisan divide in our own country - or into the internal conflicts of any of the societies that make up his story, his theories certainly seem to be extensible to them. Maybe that will be the subject of his next book...
Pax Americana is surely evolving into Pax Sin0-Americana, and how that transition is managed by both countries is going to be an interesting ride for everyone on the planet.
Read
April 11, 2016This engaging book reviews the geopolitical history of the 20th and 21st centuries from the viewpoint of trade. Its first premise, which I don't accept, is that only big wars matter. Its brief economic overview of the two world wars -- the big wars that matter -- is quite interesting. (It also gives kudos to the Vietnam War as providing breathing space for the rest of Southeast Asia to resist the spread of communism.) Its second premise, which I also don't accept, is that the only effective cause of big wars is the global competition for scarce resources. I can buy the proposition that competition of the only effective cause for wars generally except for all the other causes.
April 9, 2017
Excellent! time WELL spent. A wonderful history of economics that looks to the NOW! Read, Learn, and ask WHAT this means in the light of the evolving neo-nationalism...
Displaying 1 - 7 of 7 reviews