IBS Lunchtime Research Seminar - The first deglobalization and its implications for the current one: an inequality perspective

You are cordially invited to attend an IBS lunchtime research seminar by Professor Peter Scott Henley Business School. Please join us in Room 108, Henley Business School. If you have not received the email invite please email Angie Clark.

Title: The first globalization and its implications for the current one: an inequality perspective

Date: Wednesday 19th April 2023

Time: 13.00 - 14.15pm

Teams – A Teams link to the seminar is included for those who cannot attend in person, however attendance in person is preferred.

Abstract:

The first globalisation, which began around the second quarter of the nineteenth century and reached its zenith during 1870-1914, considerably increased international trade and economic growth, but destabilized the world economy. This article examines how globalization sowed the seeds of its own destruction, creating instabilities and inequalities both within and between nations. There were many “winners” from globalisation but also many influential “losers,” who promoted anti-globalization policies such as trade protectionism; military expansionism; imperialism, and the scapegoating of immigrant and ethnic minority groups, to maintain their status. More widely, globalization progressively destabilised the balance of power within Europe, mainly due to Germany’s emergence as the prime European “Great Power.”

These factors suddenly terminated globalization in 1914. World War One and its aftermath created world over-supply of commodities and incentivised “beggar thy neighbour” policies in trade, international investment, taxation, currency stability, and migration, creating autarchic regimes that used their legal and extra-legal powers to channel national income into rearmament. Conversely, the democracies progressively lost control of their tax bases (especially regarding the top one percent of the income distribution).

The paper also explores how, during World War Two and its aftermath, policy-makers finally learned the lessons of the first globalisation’s downfall and developed trade, currency, and international capital movement policies that prioritised long-term stability over short-run growth. Finally, the paper examines the implications of the downfall of the first deglobalisation for the current one, and the lessons we can draw. A historical perspective highlights salient factors for contemporary business; particularly that deglobalization can come as a very sudden shock, creating ripple effects that are enduring and very difficult to reverse. Moreover, the decisive shock is likely to be at least partially driven by the direct and indirect impacts of globalisation, which boosts trade and global economic growth, but is profoundly destabilizing, as it increases inequality and undermines the established order.