The current round of globalization' is merely a continuation of an economic pattern begun in the 19th century that was interrupted in the years following World War One.

Thus the economic history of the 20th century begins with the de-globalization' that followed WW1. The immense debts incurred by the leading industrial nations of the period caused them to raise tariff and import barriers in an effort to keep money inside and pay off their debts quickly.

The result of these polices was to weaken international trade and to make the world economy vulnerable not just to an economic downturn such as began the Great Depression but to being unable to trade their way out once it began. Thus the depression became Great' by constantly spiraling downwards.

The immense shifting of resources brought about by re-armament and WW2 in a sense increased international trade began the process of economic revival.

While in theory the post-war world was a triumph for Keynesianism, and this meant closed economies and capitalism in one country'. In reality the U.S., as the largest economy, was all for as much free trade as it could get. The U.S. therefore forced Britain and anyone else it could to open up their old colonial empires to free trade. It also fixed a U.S. dollar exchange rate which supported trade but allowed restrictions on capital movements, which did not.

Thus the world of the 1950s and 1960s was one of semi-restricted markets, one which reached its limits in the 1970s as the rate of profitability began to dip due to the slowing of growth. Something had to be done to increase growth and allow profitability to expand again. This was done when Nixon eliminated fixed exchange rates in 1971, a move began the freeing of trade as each nation was forced to follow suit in freeing their own exchange rates and ultimately allowing the free flow of capital.

Essential to raising profitability was getting rid of the last Keynesian ideal - full employment. The kind of control required by individual counties over their money supply to keep unemployment low was contradictory to the free trade and free exchange rates that would expand the global economy. The permanent rise in unemployment rates, which also helped decrease pressure on wage rises, was remarkably easy to effect.

Throughout the 1980s various economies adopted monetarist policies, or had them forced on them by the threat of capital outflows to countries that had already adopted such capital friendly policies. By 1989, capital had achieved freedom to roam the globe at will and the renewed globalization that we now enjoy could really begin.

The current world economy is one in which capital is largely free of the individual restraints of nations, still less the demands of labour. It is within this context that the World Trade Organisation operates, virtually independently of the nations that make it up and the beginning of a true world government.

Learn more about this author, Peabody Snickersbee.
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