Future Perfect The Challenge and Promise of Globalization

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1 The Fall and Rise of Globalization In March 1906, a twenty-two-year-old Englishman who was to become one of the titans of the twentieth century took his first foreign holiday unencumbered by his parents. The trip was spent largely in Italy, a country whose food he praised but whose youth he regarded, perhaps hypocritically, as "physically repulsive." For the young traveler, the journey was a revelation of the joys of globalization. He needed no passport to visit foreign countries, and his gold sovereigns were universally convertible into local currencies at fixed rates of exchange. He found that the world was knit together by railways and steamships and that he could find comfortable hotels wherever he wanted to stay and post offices whenever he wanted to get a message back home. At the time, Great Britain occupied much the same position in the world that the United States occupies today: that of commercial leviathan, military giant, and cultural arbiter. British goods dominated the world's markets. British money irrigated the world's businesses. British military might protected the world's trading routes. British culture was so powerful that foreigners even took to playing that most idiosyncratic of games, cricket. And most of the world accepted the British gospel of free trade and globalization. There was no sterner defender of this creed than the young traveler, John Maynard Keynes, one of the most gilded members of one of the most gilded generations in English history. The son of a noted university administrator, he had won scholarships first to Eton and then to King's College, Cambridge. He had tried, rather precociously, to win a fellowship at King's soon after graduating, but he had been told to wait. Yet while Keynes was a child of the establishment, he was certainly not a creature of it. A homosexual in an age when such a trait was not always appreciated, he also belonged to a generationor rather to a clique within a generation, the Bloomsbury groupthat was in more or less open revolt against the certainties of Victorian civilization. As Keynes's biographer, Robert Skidelsky, records, he spent time with the painter Duncan Grant in Paris on his way to Italy, and then with Lytton Strachey in Genoa, where the two men passed the hours, in Keynes's words, "eating omelettes and discussing ethics and sodomy."1 Strachey later wrote the definitive Victorian-bashing book, Eminent Victorians. You might imagine that Keynes rebelled against Victorian economics as well as Victorian morality. Yet at the time his enthusiasm for free trade was absolute. In his undergraduate days, he spoke out against protectionism in student debates. "I hate all priests and protectionists," he wrote to a friend, praising "Free Trade and Free Thought." In fact, free trade was arguably the only political cause that stirred the young Keynes. "We must hold to Free Trade, in its widest interpretation, as an inflexible dogma, to which no exception is admitted," he thundered. "We should hold to Free Trade as a principle of international morals, and not merely as a doctrine of economic advantage."2 Three great works helped persuade young men such as Keynes of the virtues of free trade: Adam Smith's The Wealth of Nations (1776), David Ricardo's On the Principles of Political Economy and Taxation (1817), and James Mill's Elements of Political Economy (1821). Smith's argument that the economy works best when it is left to the "invisible hand" of the market was above all a brief on the virtues of trade: Protectionism is one of the most misguided forms of state intervention. Mill reinforced Smith's argument by