Seven Crashes: The Economic Crises That Shaped Globalization

by Harold James

A leading economic historian presents a new history of financial crises, showing how some led to greater globalization while others kept nations apart
 
The eminent economic historian Harold James presents a new perspective on financial crises, dividing them into “good” crises, which ultimately expand markets and globalization, and “bad” crises, which result in a smaller, less prosperous world. Examining seven turning points in financial history—from the depression of the 1840s through the Great Depression of the 1930s to the Covid-19 crisis—James shows how crashes prompted by a lack of supply, like the oil shortages of the 1970s, lead to greater globalization as markets expand and producers innovate to increase supply. By contrast, crises triggered by a lack of demand—such as the Global Financial Crisis of 2007–2008—result in less globalization as markets contract, austerity measures are imposed, and skepticism of government grows.
 
By considering not only the times but also the observers who shaped our understanding of each crisis—from Karl Marx to John Maynard Keynes to Larry Summers—James shows how the uneven course of globalization has led to new economic thinking, and how understanding this history can help us better prepare for the future.

Genres: Economics, History, Nonfiction, Finance, Politics

376 pages, Hardcover

First published May 16, 2023

About the author

Harold James is Claude and Lore Kelly Professor in European Studies and Professor of History and International Affairs at Princeton University.

Reviews

[Liinamari Astel · Rating 3 out of 5]

Harold James is Professor of History and International Affairs at Princeton University, specialising mainly in German and European economic history. Having grown up in the UK but teaching in the US since the mid-1980s offers him a unique perspective on economic affairs from both sides of the Atlantic. However, his expertise doesn’t seem to have been fully utilised with this book.
The author discusses seven economic crises that have had a profound effect on globalisation starting with the Great Famine of the 1840s and the Long Depression of the 1870s. This is followed by events of the 20th century, namely the German hyperinflation after World War I, the Great Depression and the Oil Price Shocks. And finishing with the Global Economic Crisis of 2007-2008 and the Covid-19 pandemic. These are divided into “good” and “bad” crises based on whether the outcome was a more globalised world and larger markets or the opposite. Therefore, supply crises like the Oil Price Shocks or the recent Covid-19 pandemic, are classed as positive ones as ultimately there is an elevated need for innovation to increase supply. On the other hand, the recession in 2007-2008 would fall into the negative crises category as part of demand shocks.
Whilst each of the events is clearly very thoroughly researched and the level of detail is welcomed as it helps to understand the full context and illustrates the events, the style of writing does not leave this book beginner friendly. James tends to jump between different years, players and scenes in quite a daring way, leaving the reader struggling to keep up with the main message of the chapter. Additionally, some of the sub-plots can feel slightly out of place and that much detail was not necessary to get the point across. Whilst relating to the broader topic, minor events are given too much time and not enough contextual relevancy, leaving their inclusion unjustified. With the main topic being globalisation, it focused too much on a few select countries such as the US and Germany, only bringing in China as another big player in the last chapter. It is certainly a very Western hemisphere-oriented perspective of the topic, lacking nuance regarding the involvement of the Global South, even in the crises that are examined.
Even though the topic itself is important and should appeal to both history and economics fans, the book comes across as needing to have had prior knowledge of all the crises discussed. For someone interested in the topic but not acquainted with all the detail surrounding the discussed events, this book is not likely to be a good fit. It seems, rather, to be written for someone who is looking for a new perspective or further conversation on a familiar subject.
Overall, the book accomplishes what it has set out to do but does so in a fairly disorienting manner.

[Richard Marney · Rating 3 out of 5]

A worthwhile read on the whole.

That having been said, my reaction is the author does a better job analyzing the chosen seven “crashes” than demonstrating the linkage(s) between the crisis episodes and the subsequent course of globalization.

Spoiler alert:

In the introduction section the author does provide a useful summary, reproduced here:

1. The turning points of globalization in a world that is industrialized and interconnected do not resemble each other. Each moment of crisis challenges individuals, businesses, and governments in new and unprecedented ways, and leads to a redrawing of the mental map.
2. The lessons drawn from a previous crisis often stand in the way of generating effective solutions to a new problem.
3. Negative supply shocks make for an awareness of the importance of global supplies.
4. Negative supply shocks also lead to price rises; governments often respond by allowing an inflation which they hope will allow their citizens to think that they may obtain more resources. 5. Negative demand shocks push in the direction of national self- sufficiency or even autarky.
6. Negative demand shocks tend to be deflationary.
7. Inflation can be an attractive way of tackling (adjusting to) the immediate consequences of supply shocks, but it does not and cannot tackle the underlying problem of how to obtain reliable and secure resources, over large geographic distances.

The problems of globalization—coordination between very large num- bers of independent agents—remain. Governments cannot run away from them. Voters in democracies, but also citizens in nondemocracies who will demand to exercise more voice, need to think about how the uncertainty can be turned into an opportunity rather than a threat.

[Paul Raphael · Rating 2 out of 5]

Although an informative and clearly thoroughly researched work, James sacrifices clarity of narrative and argument in favour of a barrage of only occasionally relevant detail. The grand case outlined at the start, of successive waves of globalisation and retrenchment, is somewhat lost under it all.

[Shan P S · Rating 5 out of 5]

The idea of this book is good - relating the major changes in the world and how it fostered more globalization. The book covers each major crisis in depth.

I felt that the earlier crisis - 1840s and 1870s - were the best written. There were many interesting anecdotes and facts about this time.

The Great Recession of 2008 was very heavy on macro-economic theory and was hard to read for a layperson like me.

The chapter on the Covid crisis of 2020 seemed to be hastily written. To be fair, this crisis needs some time before it can be analyzed and written about.

Overall this is a good book, covering about 200 years of economic, political and global trade history.

[Zachary · Rating 4 out of 5]

Had to study for a final today so I panicked and read this (well, at least its last 5 chapters)
All in all, pretty interesting. Don't agree with everything but I appreciate James' comprehensiveness. Would only recommend to those already acquainted with its subjects though and not to newbies: James does a great job of unveiling the overlooked bits and pieces that conventional histories miss, but a poor one at actually laying out what that history was. Thank god my newbie days are behind me

[José Dias · Rating 4 out of 5]

in a compeling history review added by an economic solid base Harold James offers a analytical model to undertand, deal with and even predict the repercussions of any economic future crise in our life's. Brining a/ your knowledge in politocal science and history will give to you a masterpiece

[Shana Yates · Rating 3 out of 5]

3.5 stars

[Ahmed Gadalla · Rating 1 out of 5]

I don't recall i have ever read such a badly written book. A hodgepodge of historical facts' axiom and quotes. It has no narrative. Some paragraphs or whole sections seem to come out of nowhere.The author often goes on tangents, long unnecessary quotations and sidestories that get nowhere and add nothing to the story, then he would forget what he was talking about.. On and on. I wonder how did Yale agreed to publish it.