Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy

by Kevin H. O'Rourke, Jeffrey G. Williamson

Kevin O'Rourke and Jeffrey Williamson present a coherent picture of trade, migration, and international capital flows in the Atlantic economy in the century prior to 1914—the first great globalization boom, which anticipated the experience of the last fifty years. Globalization is not a new phenomenon, nor is it irreversible. In Gobalization and History, Kevin O'Rourke and Jeffrey Williamson present a coherent picture of trade, migration, and international capital flows in the Atlantic economy in the century prior to 1914—the first great globalization boom, which anticipated the experience of the last fifty years. The authors estimate the extent of globalization and its impact on the participating countries, and discuss the political reactions that it provoked. The book's originality lies in its application of the tools of open-economy economics to this critical historical period—differentiating it from most previous work, which has been based on closed-economy or single-sector models. The authors also keep a close eye on globalization debates of the 1990s, using history to inform the present and vice versa. The book brings together research conducted by the authors over the past decade—work that has profoundly influenced how economic history is now written and that has found audiences in economics and history, as well as in the popular press.

Genres: History, Economics, Nonfiction, Sociology

343 pages, Paperback

First published July 6, 1999

About the author

Kevin O'Rourke is Chichele Professor of Economic History at Oxford, and a Fellow of All Souls College. Between 2014 and 2018 he was Research Director of the Centre for Economic Policy Research, a network of 1100 researchers in universities throughout Europe. He is a member of the Royal Irish Academy and a Fellow of the British Academy.

Reviews

[Christopher Sutch · Rating 3 out of 5]

This work offers some good empirical data that shows that the globalization of the world capitalist economy at the end of the 20th century was not, in fact, very different from that which occurred toward the end of the 19th century. Even the scale, in several respects, is similar to (if not rivaled by) the earlier global economy. The authors also make good attempts (for economists) to assess the qualitative evidence of various aspects of economic convergence.

The problems with this book begin (and mainly end) with the misleading title: in actual fact, "globalization" is beyond the scope of the authors' study. They freely admit (in fact, have to admit) that the relationship between the global North and the global South (what most people, I think, understand by the term "globalization") is outside the scope of their study. Instead, they focus _only_ on convergence and divergence within the European economies and those of a few American economies. When addressing income distribution disparities they have to admit that convergence does not benefit "Third World economies." The more closely convergent economies are those among the "First World." Another problem with their research is an overreliance on computer modeling (with some very ham-handed adjusting of various variables in order to have the models come out "true to history"). This only underscores that human subjects, even in the mass, are not capable of being reduced to "rational actors" or computer variables or any other kind reductionist frame. Humans are endlessly unpredictable and surprising. Thank heavens.

[Diego · Rating 5 out of 5]

Para entender los debates sobre la globalización de nuestra época es necesario entender la evolución de la integración de la economía global en el muy largo plazo. Jeffrey Williamson y Kevin O'Rourke se dieron a tal tarea hace 19 años al escribir Globalization and History. ¿Qué fue lo que produjo la convergencia de las economías del Atlantico en el siglo XIX? la respuesta que los autores encuentran es que fue la migración masiva del viejo mundo hacia el nuevo y en una menor medida la apertura comercial, los flujos de capitales y la relativa abundancia de capital humano. La convergencia en factores de producción fue llevando consigo la convergencia en estándares de vida.

Si definimos la globalización como el proceso por el cual los precios de los factores convergen entonces la primera globalización se situó después de la derrota de Napoleon a partir de la década de 1820 y tomo realmente fuerza en la segunda mitad del siglo en el periodo entre 1870 y 1913. Una vez analizando y demostrando el nivel de integración de la economía global del periodo los autores buscan explicar como tal integración se revertió a partir del estallido de la Gran Guerra y hasta la posguerra de la Segunda Guerra Mundial.Lo que Williamson y O'Rourke encuentran es que la economía global del siglo XIX se estaba ya desintegrando antes del estallido de la Primera Guerra Mundial y una de las principales causas de dicha desintegración si bien no la más fuertes fue la creciente desigualdad en las sociedades del nuevo mundo.

Conforme la desigualdad creció en Estados Unidos, Canadá, Argentina, Brasil, Australia y otras economías en proceso de industrialización, ricas en recursos naturales y tierra, con escasez de mano de obra y flujos de capital que buscaban retornos más altos estos países comenzaron a poner barreras a la migración para proteger sus mercados laborales y mantener salarios más altos y a colocar aranceles al comercio para proteger sus industrias de la mano de obra barata de otros países y sus manufacturas. La globalización al exacerbar la desigualdad se destruyo así misma.

Williamson y O'Rourke advierten al lector que estas lecciones nos hablan directamente a nuestro tiempo en esta nueva era de la globalización, donde vemos la desigualdad crecer nuevamente y donde el rechazo a la globalización puede traer su destrucción nuevamente. A pesar de ser un libro escrito en 1999 es una lectura que se siente muy contemporánea y que habla directamente los fenómenos de nuestro tiempo. Es una muestra de como la historia económica puede servir para dar luz a los problemas de nuestro presente y un recordatorio de la soberbia que suele dominar a los economistas cuando discutimos las ventajas del libre comercio internacional. Los efectos distributivos de la globalización importan, importan quienes ganan y quienes pierden, los economistas deben alejarse de sobre-simplificaciones en estos temas, no ser apóstoles de ideas sino críticos a la realidad que se observa.

Es una lectura sumamente recomendada, llena de conocimiento y aplicación de un razonamiento económico simple pero muy potente. Muy recomendada su lectura (aunque requiere cierto conocimiento de teoría económica básica para disfrutarse) es todo un clásico.

[Bernard English · Rating 4 out of 5]

There are quite a few warnings about the limits of the economic modelling used to gauge the impact of trade, capital flows and migration on the late 19th century and first decades of the 20th century. As a layperson, I trust the statistical analysis is correct, but my faith was sorely tested when reading this:

"Racism or xenophobia do not seem to have been at work in driving the evolution of policy [there was a definite tightening of immigration policy beginning in the late 1800s] (which is not to deny that they existed). Rather, it was immigrant quality, labor market conditions, and policies abroad--especially those set by the economic leaders, Britain and the United States--that mattered most for policy."

I'm glad racism and xenophobia were not the main drivers of policy, but it is hard to believe, especially when you consider that many political leaders themselves were racist.
The authors give several prescient warnings. One is that if tightening immigration policies at the time were designed, at least in part, to protect the unskilled worker, then we shouldn't be too surprised by some anti-immigrant rhetoric in the US nowadays. Consider that many say real wages in the U.S. have remained stagnant since the 1970s, not to speak of the earnings gap between the college-educated and the rest of the workforce.
They also have a more general warning about the reversibility of globalization: "The record suggest that unless politicians worry about who gains and who loses, they may be forced by the electorate to stop efforts to strengthen global economy links, and perhaps even to dismantle them." Sounds about right to me.

[José Augusto Miranda · Rating 3 out of 5]

This book is a well known classic of the new economic history, dedicated to convergence of the atlantic economy between 1870-1914. The book has a lot of econometric tests to find causality between migration capital and trade to the convergence of the real wages of the selected 13-17 economies. The main strength of the book is its main weakness. The book relied excessively on econometric tests. It trusts a lot on his regressions and use its results to set the parameters of what is globalization. It sounded very pretentious. When their econometric tests can't furnish some explanations, like why Iberian countries didn't had mass migration and why their migrants didnt go to the prosperous US, they simply dismiss as a less important topic. There is no qualitative sources, no discussion with economic sociology or the very established historiography of mass migration. It's seems to me a very outdated book, specially regarding its demódé methods (New Economic History methods tumbled down on their own weight some years ago).

Although, I do not dismiss the contributions of econometric test. Not at all. They are very important to assess capital flows for instance, but there is a world of historical methods that have the power to make these Econometric tests come to life. They way the authors put it it's grey and tasteless, but they come with a very elegant and sucessfull answers to the questions that they created. That's a thing with new economic history, you depart with a model and consider valid only what fits it. The rest is just trivia. It is not. The rest is just History.

[Ccc · Rating 5 out of 5]

Excellent book, with the only caveat that some pages could be omitted with no loss in quality. In a nutshell, the books posits and empirically proves that direct labour mobility (as opposed to Heckscher-Ohlin trade-mediated mechanisms) was the main force behind price convergence in the 19th century. Capital moved starkly as well, but not in the direction predicted by the convergence hypothesis. Inevitable trade-induced inequalities were behind the policy backlash against globalization in the late 19th century.

[Michael · Rating 3 out of 5]

An interesting take on the globalization story, shifting the tale of nineteenth century globalization from the traditional interpretations. Namely, instead of the era being one where the British led and the rest of the world sought to catch-up, the work argues that the real story was about convergence in wages between the various Atlantic economies.