How to understand globalization? Some say globalization is a recent phenomenon: new financial products, new trade flows, new crises, new technologies and, perhaps, new regulations. But for the attentive observer, globalization is old – concomitant with the development of commercial and financial capitalism in Europe from the 15th century.
The international financial market is only a reinvention, financial derivatives and “structured products” have always been around, trade as a share of world domestic product has only reached in the late 20th century its late 19th century levels.
In the meantime, other characteristics stand out: for example, the role played by institutions in charge of managing international integration contrasts with the 19th century lack thereof.
The good news is that we have new tools to think these trends through. The considerable expansion of quantitative economic history brought out a new set of methods – and new information tools bring new data in, or improve the performance with which older data can be used.
These new methods have inspired and will inspire policy makers in the future. The extent to which the sub-prime crisis has led observers to draw comparisons with the interwar crisis is one example.
A trend has also been observed in international organizations – such as the IMF, the World Bank, the OECD or the BIS – to combine traditional research with cutting-edge economic history insight. More and more surveys provide historical background and data. For the purist, the outcome is not always satisfying – but the moves go in the right way.
Historical Imagination shows the way forward. After the deepening of “pure” theorizing in the 1970s, 1980s and 1990s, it is time to go back to the roots of political economy and match theoretical knowledge with empirics.
