Crises trigger creative, expansive and innovative processes. Historically, they have led to an intensification of global links, says Harold James in a long article on Foreign Affairs where the historian displays common patterns of past major crises that drove globalization in the last two centuries. It was the case after the 1840 crisis which lead to an expansion of trade and lower barriers, as well as greater mobility of capital and people. The challenge posed by food shortages during this event created the need for more diversified supply chains and a greater interdependence of economies. Another common aspect of crises is that they become a test case for governments themselves, who must prove their efficiency and necessarily be open to innovative responses. Indeed the 1840 crisis, and the 1848 insurrections that followed all around Europe, ended up being a propulsive push for major institutional changes resulting in the creation of nation-states with more effective and capable institutions. It is the start of the Golden Age of globalization – a process that will undergo many booms and busts in the two centuries that follow. The 1970s oil-shock is yet another historical moment of crisis that gave globalization a boost.
For as much as the Covid-19 crisis is different from past ones, they do have a few characteristics in common. The scarcity of certain goods (e.g. medical supplies) for one, is a shared feature which was intensified also by the disruption of production chains. The questioning of the governments´ abilities to lead the way out of the crisis is also present: his poor handling of the crisis – among other things – did cost Donald Trump his place at the White House. It is thus high time to look at what we can learn from who did better than us, and use this innovative push to build up improved institutions and resilient economies. Wellbeing and prosperity cannot be enjoyed by individual states alone; cooperation and collective responses to global challenges are needed. The current pandemic has made this lesson crystal clear, and the same forces we have seen in action during past crises will drive globalization up again, says Harold James.
Princeton University professor Harold James will explain why he thinks the current crisis will result in a renewed wave of globalization, and what this could mean for Germany and its next government – on 26 May at our upcoming VIII New Paradigm Workshop.