Courtesy Reuters

Don't Panic: How Secure Is Globalization's Future?

In This Review

The Challenge of Global Capitalism: The World Economy in the 21st Century

By Robert Gilpin
Princeton University Press, 2000
352 pp. $29.95

A century ago the world entered the first age of globalization. Trade and investment spread rapidly around the world, spurred by revolutions in communication and production technologies and a stable gold standard. Behind the scenes stood Great Britain -- preeminent in manufacturing, finance, and naval power -- which championed free trade throughout the Victorian era, beginning with the celebrated repeal of its protectionist Corn Laws in 1846. A succession of British governments pursued agreements to lower tariffs; London banks put capital to productive use abroad; and the Royal Navy ensured open access to world markets and resources. The result was an unprecedented flow of goods, capital, and people -- and the rise of the first truly open world economy.

In 1900 there was every reason to expect and welcome a future of continued world economic openness. Nineteenth-century globalization advocates such as Richard Cobden and John Bright argued that free trade fostered growth and created vested interests in favor of stable and peaceful relations between countries. After all, Britain's trade missions to continental Europe during this period were not just business initiatives but peace missions as well.

But this optimism was soon to end. The open world order came crashing down in 1914, a victim of rapidly shifting power relations, escalating strategic rivalries, the waning of Pax Britannica, and finally, war.

Today the world is well into the second age of globalization, propelled by technological revolutions and the advanced industrial states' commitment to the liberalization of capital and trade. This time, the United States has put its hegemonic weight behind developing the open world economy -- creating multilateral institutions, sponsoring trade rounds, opening its own markets to imports, and singing the praises of commercial liberalism. Just like a century ago, the march of global capitalism appears irresistible.

But is this new age of globalization any more secure than the last? In a masterful new account of contemporary world capitalism, one of America's most distinguished scholars of international relations tells us that there is reason to

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